USAA forcing me to more coverage than I would like

[signal]

I just reviewed my USAA homeowners policy.

They have my "Dwelling" at $268k, and my Personal Property at $198k.

I told them that is too much for the dwelling as houses like mine are selling 180-200k right now and that includes the lot. They said this is for the "rebuild" cost, which is higher. I still think to "build" my home, I could get someone to do it for $70/sq ft. They told me the dwelling coverage amount is done by a computer and is non-negotiable.

Then onto personal property. I told them $100k should be plenty and they said that my personal property has to be 75% of the dwelling coverage because of some additional coverage I have where they replace items with new current items vs. cash value. That is some $350 "option" I signed up for. If I get rid of the option, then I can reduce personal property to 106k, but all of this just saves me like $400/year........which doesn't seem worth it.

So I guess I am just ranting, but also curious, is it common for the coverage on the dwelling to far exceed what houses+land are selling for in the area?

[AngelinaCat]

If you are NOT dealing with an independent Insurance Agent, that handles policies for a number of different companies, you need to do so. An Independent Agent will comparison shop for you and fit you with he best policy for your situation. You must do this in person. You cannot do this over the phone or online.

Also be wary of any 'computer models', and "the computer says this, and that is that." That is NOT that. Our Independent Agent readily admitted that when doing the computer model and profile for us, a software glitch threw us into a firehouse district that is more than 30 miles from our home. Yet we live within two different firehouses--five miles on one side, four on the other. The agent had to manually make the correction.

Cancel this policy you have now, and go shopping. Good wishes to you!

[ValleYum]

ACat is right - perhaps calling and comparison shopping with some independent agents would help you decide.

I am somewhat prejudiced about USAA since I have been a member for 23 years+. I will say that typically USAA is hard to beat price-wise (for identical coverage) and their claims service has always been second to none for me, YMMV.

USAA uses software to determine LKQ (like, kind, quality) of a dwelling's rebuild cost. The rebuilding cost calculations are based on a survey they send out every couple of years (I think I have filled out about 3 of them in the 7 years we have been here). The cost (according to them) to rebuild our house is about $107/square foot which is a few dollars more than the cost of new construction homes here. My Zillow estimate and my tax assessment are both different from this amount that USAA computes, too.

My USAA costs:




My property tax assessment:




My Zillow.com zestimate:




The contents option you mention I believe is their Replacement Value Coverage. It's the difference in getting $150 for your 2 year old microwave versus $11. How can you replace a microwave for $11 - even if you find one at a yard sale that is comparable? Multiply that by the contents of your home that are affected when you are hit by a calamity and it adds up to thousands of dollars pretty quickly.

So, I guess it is a gamble either way. I think that I am an insurance agent's dream customer, LOL.

Oh, and if you haven't taken pics of the inside of your home - take some! Email them to yourself at a yahoo, hotmail or gmail address so that they are on their server - because if they are on the hard drive of your computer, chances are in a situation where you need them, your computer may not be operable.

[SweetGeorgia]

I'm prejudiced in favor of USAA, too. I've used a lot of insurance companies over the years and they just seem less evil than most. Plus, they can actually answer questions when you call.

On the replacement-value, I guess I'd say that you are paying for Homeowner's Insurance - not Homelessness Insurance. If you had a total loss on your house, would it be OK for the insurance company to say - hey it's cheaper to buy you another house so that's what we're going to do! No - because you have THIS piece of property and what you paid for is replacement of your house. If YOU wanted to go get another house instead, then that should be your option (but it shouldn't be something they could decide).

And insurance companies have pretty good data on actual replacement cost. You might be able to get your house rebuilt for less, but it's way better to be a bit overinsured than to not have enough insurance when you need it. Besides, rebuilding after catastrophic loss can be more expensive than building new from the ground up.

Still, I think you're smart to pay attention. I changed to USAA in the first place because my insurer had jacked up the value of our townhouse to about $650K. When we had paid $400K (built new) only 5 years previous. It was ridiculous, and they were ripping us off. My homeowners insurance went from $1800/year to $800/year when I changed.

Have you considered raising your deductible? USAA can tell you how your premium would change at different deductible levels. I found that $1,000 saved us a lot over $500 and $250, but there wasn't much benefit from going higher than that.

Good luck!

[avery89]

I know its been a while since your question, but the $350 "option" is just a package deal... in my state of NC its called an HE7 and included various things.... some of which are important, some of which are not depending on your needs. That does NOT mean you can't get a basic policy, and add some of what's important to you a la carte. replacement cost on contents is VERY important, but you don't need the package to get it, just ask to drop the package option and ask for a "replacement cost on personal property endorsement".
I'm not licensed in FL, so I don't know if there is something different about their procedures, but in every state I write in, 50% of dwelling is standard for personal property, some companies give you a credit for having less than that, but it is usually minor.
And yes, replacement costs are done be a computerized formula, and there can sometimes be errors, especially in human input and variables. Replacement Cost is NOT Market Value, 2 very different formulas, and during the housing boom you certainly wouldn't want to have insured your home for what it would sell for if you could replace it for half as much. But for the most part, it calculates based on square feet, then adds for any special features, and is very accurate. Everybody thinks that they can rebuild their homes for less, but it is usually because they are not experts on construction and demolition costs. If you do have some proof (similar home just built), you can always appeal with the underwriter, but again, that is usually unlikely.