Insurance replacement value
I’m experiencing difficulty in getting a realistic replacement cost value for my brownstone from my insurer, Brownstone Agency. Can anyone say how replacement cost value is determined. Is this usually done by the insurer, by an appraiser, or what.? According to the NYS Insurance Dept. you should be insured at 80% of replacement cost to…
I’m experiencing difficulty in getting a realistic replacement cost value for my brownstone from my insurer, Brownstone Agency. Can anyone say how replacement cost value is determined. Is this usually done by the insurer, by an appraiser, or what.? According to the NYS Insurance Dept. you should be insured at 80% of replacement cost to get full coverage on a loss.
Also remember that the value of the land should not be reduced by a fire. In some cases the value may actually rise. What is the buildable square foot cost now a days for better quality construction? $300? Our neighbors had there front yard cast iron fence destroyed by a out of control car and they had a hell of a fight getting the insurance company to pay for replacement costs.
One solution would be to hire an independant appraiser to come out and assess your house.
Market value is a bad gauge of the replacement cost. Depending on the neighborhood, the replacement cost can be more or less than the market value (ie: if it hypothetically costs, say, $2M to rebuild a brownstone, the market value is higher in Brooklyn Heights and lower in Crown Heights but the rebuilding cost is the same regardless of location).
I have heard questionable things about the Brownstone Agency on this forum – I would recommend getting quotes from companies such as Chubb and Fireman’s Fund as well. The more reputable companies will even pay for the appraisal themselves (ie: Fireman’s Fund did this with us).
Be very careful about the wording of the policy – request a policy with a “replacement cost endorsement” and one which will cover reconstruction with “like materials and construction” and watch out for insurers who will only cover materials “still in production”. If your house goes up in flames, they may try to replace your 100 year old doors, moldings and wood lath plasterwork with junk from home depot and sheetroc for walls.
I have had good experience with the Mogil Group in Manhattan.
I don’t think repacement cost is the same as market value. I would imagine if your house burned down leaving you a shell, $100,000. per floor should give you a nice replacement for your loss. Market value is more than twice that figure for most brownstones.
I first decided to go with Brownstone Agency MANY years ago because their policies had an “agreed value” rather than a “co-insurance ” clause, thus you didn’t need to insure for 80 percent of the replacement cost with “like construction.” Back in 1974 this was VERY important because the cost of replacing a brownstone, with hardwood trim, leaded glass, etc. was vastly higher than any realistic market value. An insurer (other than Brownstone Agency) could screw you if you had a major loss, by claiming. for example, that you needed to cover the $1,000,000 replacement cost of your house, rather than the $50,000 market value (YES, houses DID cost that little).
Jumping ahead 30+ years, market values have gone up soooo much that the distinction between market and replacement values, so important in the ’70s, may now be irrelevant. In thev same time frame,customer service at Brownstone Agency has greatly declined. I had always been content to accept whatever value Brownstone Agency suggested for my house until about two years ago, when my policy was last up for renewal. The suggested amount was so low that I phoned BA, looking for guidance on setting a higher figure. I got no where! I ended up pulling a higher number out of a hat and insuring for that amount. BA was perfectly happy to accept the higher premium, but I wonder if I bought too much insurance.
Nevertheless, AFAIK Brownstone Agency policies still don’t require 80 percent of replacement value and will bay up to the policy limit in case of a loss.