Do You Have Replacement Cost Insurance?

After talking to a few people after this flood they are finding out their flood insurance does not cover "replacement costs" on contents but instead they opted for the less costly version that is pro-rated. Be aware of the type of insurance you have and this applies to fire insurance too, "replacement costs" will pay for the full value of the item or equivalent. If you have pro-rated insurance you only get the value of the product at the time it was destroyed.

When we had the fire they did an inventory of the whole house, this was used to generate a list of items and each item had a column for the cost to replace it with a new item. Next to that was the pro-rated value and those values were mostly in the 30 to 60% range. You can see where this is leading too, if you have to replace the entire contents of a house but you're only getting 50% of what it's going to cost to purchase those items you're going to be in trouble.

Wouldn't take much to ruin me here .... can't afford it. Already paying a grand a year for basic homeowners insurance. On top of 3 grand a year for property taxes ... another grand + for the mortgage per month ...

The only thing I have going for me is my tools won't melt, nor will the Mark III.

Obviously if the cost is too high for your budget then it's not an option, just trying to give a heads up to others. As I said this is coming as a surprise to a lot of folks that never read their policies and expected to get the full replacement cost.

I have talked to my insurance rep and we have a good raport. We made adjustments to my policy and the cost difference between "basic" insurance, which is the minimum allowed by law, and higher amounts of coverage was small. Maybe not as much as you would think, Smitty. It's worth giving your rep a phone call and asking.

I spoke to my sister in law in Owego last night. She said a lot of people in that town that had no insurance have gotten hefty FEMA checks already. She is still waiting for her insurance money. Apparently her flood insurance only covered structural, and her homeowner's insurance didn't cover floods! They have 2 houses in that town, apparently one policy covers some of the possessions losses from "septic backup", and the other does not. I guess some bad stuff came back into their basements after the water subsided, from town work on the sewers and storm drains. Their houses are gutted to the floor beams on the first floors. They are living in the houses and still waiting for the places to dry out. I'm trying to be a good guy and go up and help, I don't think they even have any specific plans onhow they are going to repair the overwhelming damage yet. From the sound of it, I'd be there for a couple years.

Backup of sewer or drain covers up to 10 grand ussually and is to equipment only such a heater, washer dryer and that sort of thing. It does not pay for repairs to a finished basement. No Homeowner policy pays for flood. Earth movement (earthquake) is also an optional coverage which almost noone chooses here in the Northeast so they can save about 10% on their premium. Lots of folks are wishing they had that coverage too.

Replacement cost is all most of us write for regular homeowners policies now. There are a few hold overs from the old days, but very, very few. The cost difference is almost non existent.

Flood Insurance is run by FEMA as most of you know. The policies are all the same, here is a link to the flood policy for Maine as na FYI.It is a pain because it is not always the same property or dwelling amount and many people choose no personal property coverage at all to save some money. Big mistake, as many are finding out these days.

Yeah we have "Replacement Costs" policy for our house/property, plus an umbrella. Yet when Hurricane Irene dropped a 200 year old oak on our garage, the inspector said we would only get 20% of "Replacement Cost", due to the age of the structure! Its the same age as the house! We can't rebuild it for the amount of money they gave us. If that tree fell on the house, would the ins comp only have given me 20% of the costs to repair the house??? Should I get another company?

DVC500 at last wrote:Yeah we have "Replacement Costs" policy for our house/property, plus an umbrella. Yet when Hurricane Irene dropped a 200 year old oak on our garage, the inspector said we would only get 20% of "Replacement Cost", due to the age of the structure! Its the same age as the house! We can't rebuild it for the amount of money they gave us. If that tree fell on the house, would the ins comp only have given me 20% of the costs to repair the house??? Should I get another company?

Everyone looks at insurance as a commodity until they have a claim, then they realize you get what you pay for. What incentive does the 1-800 claim company have to make you happy? None, but a guy like me who has to face the people who have claims on a daily basis, has a lot of incentive to do the right thing. Get an agent who is willing to spend some time with you so you know what you are buying, otherwise, yeah, it is a commodity that you will probably not be happy with when you need it.