Home Insurance
Help!! I am very confused about how much to insure my house for -replacement cost. Is there any formula for how much you deduct for the land? What is the replacement cost per square foot running these days? I have a 2 family -3 floor brick townhouse market value is 1.6 million. It is on…
Help!! I am very confused about how much to insure my house for -replacement cost. Is there any formula for how much you deduct for the land? What is the replacement cost per square foot running these days? I have a 2 family -3 floor brick townhouse market value is 1.6 million. It is on the narrow side and total sq feet is 2,085 and the site area is 1570 sq feet. Insurance company suggests replacement at 522,000 but that seems really low to me. 560,00 would bring it to $268 per square foot to replace. I don’t know if that is enough. ALso, what kind of water damage protection do most people have? Currently I have 250,000 which also seems really low. I’d so much appreciate some feedback and help with this!!!
Re the water damage limit, check your policy: most likely this coverage is Water Damage Legal Liability. WDLL covers you if water from your house affects your neighbor – i.e. a pipe break in your house causes water damage to the house next door and that homeowner requests compensation under your policy. If it is WDLL, $250K is more than adequate.
For regular water damage to your house and contents, that’s covered under whatever limit you have on the house and personal property.
Not wishing to confuse matters, but I’d bet location has a lot to do with the ratio between replacement cost and total cost – 3,000 square foot house in Brooklyn Heights costs as much to rebuild as the same 3,000 square foot house in . . . well, elsewhere.
I live in Park Slope, house is 2800, give or take. I’m thinking $600k to rebuild nicely is a decent amount. End of the day though, it’s what you’re comfortable with. $250k in water damage seems very high to me.
Think the house itself was insured for @600k. The lot itself is 100 feet so the land makes up a good chunk of your purchase price. In the end we plumped with Liberty Mutual for home insurance.
check out Marshall and Swift. appraisers use that to determine replacement costs
Thanks everyone. Still not certain what part of the value is in the land which is not insured. Also to 10th Street Reno, what did you end up with for the replacement value for your 2200 square ft house?
ANy recommendations on how much to insure for water damage?
WJCOhen-who is your insurer? It is strange that there is such a large discrepancy between recommendations for a similarly sized house.
You have to be careful here. As one of the posters above notes Chubb will provide cover for ful replacement cost. ie. you can rebuild very much as prior. Most other insurers will not do that. So, let’s say you pay for coverage of $1m there’s no gaurantee that would be the replacement cost. Some firms would only pay for replacement cost and that means the cost to build a replacement house to code, NOT to the prior brownstone original standard. If this rebuild cost 500k then you are paying a premium on the $1m but only ever going to get the benfit of $500k.
Most Home insurers will run through some very specific questions to help you arrive at the correct replacement cost.
To give you an example – our house is Three story brick and 16 foot wide. Approx 2200 square feet. Chubb wanted approx 5k per year to insure while Liberty mutual were more like 2.5k but the latter only insured replacement at 575k.
I’d also suggest you have a policy that increases the replacement cost in line with inflation each year.
There are a good number of other factors impacting premiums such as deductible levels but these are some things to consider.
Perhaps in this day of hurricanes, floods, moose-slaughtering vice presidential candidates, I shouldn’t say this, but what are the chances that you will have to totally replace your house? Are you getting this insurance for your piece of mind (in which case spend what makes you comfortable) or just to make your mortgage company happy?
our houses are similarly sized and they quoted me $800K as the replacement cost based on what the appraisal said…odd…did really hike up my insurance costs….
Not sure what amount you should get, but my understanding is that some insurance companies (Chubb?) will pay guarantee replacement of your home no matter the cost. They will give an estimate when you get your policy (which I assume is relevant in determining the premiums), but should the cost overrun in rebuilding, they guarantee replacement no matter what.
Good luck