Loans Answers

I Need your input on home insurance!

Question: Another data point: our house, in an urban area, was appraised at about $375K. We pay about $300/year.

So clearly the price of insurance is not always proportional to the value of the house — there are a ton of other factors.

WOWWWWWWWW! How lucky. Our home is valued about $150K and we pay close to $800 a yr. Oh and the fire dept is at the end of street-about 3/10ths of a mile. Guess it depends on where you live.

We have Amica. We pay almost $2,000 a year (but we get a 15% dividend each year) for $180,000 with a 1% deducible. Texas homeowner’s is the highest in the US and it’s difficult to get. Hopefully some reform is on the way!!!!

Chris in Pearland, TX

Answer: By ‘appraised’, do you mean ‘market value’ or ‘cost to replace’? There is a big difference. ‘Market value’ most often includes the land & what other houses in your area with the same features are selling or have sold for. ‘Cost to replace’ is the actual cost of construction in today’s dollars. Let’s say you have a home that was built in the 1940’s, back then the construction of a home was different that homes that are built today. They may have used 2×6’s instead of 2×4’s, so on and so forth.

Rates differ all over, they differ by county, by city, sometimes even by street (in the larger metro areas like Detroit & Chicago).Other factors to consider may be:

* Age of homeowner (may get a ‘mature’ or ’senior’ discount) * Deductible (many companies give discounts for higher deductibles) *Credit record (credit scoring is a real hot-button issue right now. Insurance companies are increasing rates- oops – I mean decreasing discounts for those with bad credit records. They supposedly have proof that those with bad credit records are more likely to turn in claims and have higher claim values than those with better credit. I’m sure you can find evidence the other way also – just another reason to make more money) *Claims (some companies now give discounts if you have been claim free or surcharge you for having 2 or more claims that you could have prevented from happening – ’stupid claims’ like leaving the bathtub running or backing into your house with a backhoe/actually had this one happen) *’Attractive nuisances (swimming pools, hot tubs, trampolines – things that attract possible liability lawsuits – doesn’t matter if their fenced in or not, a tresspasser can sue and probably would end up with policy limit) *Animals (dogs mostly. Keeping a known agressive breed could jack up insurance, elminate coverage for actions of the animal, or could cause termination of the policy) *Riders (jewelry floaters, water overflow, watercraft, etc. Coverage that you purchase in addition to the standard home policy) *Other discounts (multi-policy, longevity/being with an insurance carrier for a period of time, security/fire discounts, non-smoker, group discounts for belonging to a credit union or other group)

I sympathize with Texas, my mom bought a house near Houston about a year ago and was lucky enough to get insurance because she had renters insurance previously.

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