Homeowners Insurance & Construction Cost
Our insurer wants 17% increase in premium on policy renewal (replacement cost) on 90 yearold farmhouse, 1700 sf in CT. Have construction costs jumped so much in CT to warrant such increase in premium? Home is modest, mostly original shape, not remodeled. Insurer used $214. sf repl cost last year, now using $247. sf. Any input appreciated!
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You might want to ask your agent.
Seems to me that there is some insurance organization that publishes those kind of cost.
You might also discuss with him what "replacement" includes for a house of that age. I have not idea.
Also ask about increasing your ductible, if it is not already high. Going from $250 to 1000 or even 5000 will give big drop in cost.
I was in insurance for twenty years prior to starting my own renovation business. In general, an insurance company will use the higher figure because the majority of insurable losses are only partial losses and it is much more expensive per square foot to repair a partial loss than it is to build a house from scratch. That being said, I know that down here (southern New Jersey, Long Beach Island) basic construction starts at $175/sq ft but realistically, you are hard pressed to keep it under $225, and that is from scratch. One thing to check on your policy....will your carrier pay you to rebuild to code? If your house is that old, chances are that it would not meet current building codes. Your insurance company may only pay you to replace WHAT YOU HAD....if what you had doesn't meet current building codes, you may be stuck to cover the difference, no matter what limit you are carrying on your policy.
In a prior post, someone mentioned about data to estimate replacement cost. Yes...there are a number of software venders that provide regional replacement cost data. My experience has been that most insurance agents know very little about the construction of a house and therefore know very little about the information to enter into these software programs. Garbage in, garbage out. Also...IMO, these programs tend to estimate low. The only company I felt that did a really good job in estimating the replacement value of a home was the Chubb Insurance Group. By far...they have the best policy on the market. But they only deal with high end stuff...replacement values of $600k and up.
Hope this info helps.
Brian.....Bayview Renovation