Great questions and I hope you get some good answers. The only thing I can share is that I don’t think the total replacement should be that much less than the cost to build. We just built and our agent wrote our policy at just under our build cost - by like 5-10k. I asked if we could bump it up to make it closer to our cost - or if they do that because the builder cost has that much margin added? They replied and just upped the amount.

We had a house totaled, and were insured with LibertyMutual crooks, liars, cheats, scum. Been there, done that, ate a cow.

> When we insured the house, we were told that the insurance company’s replacement estimate was $240,000.

There are two(2) policy types: replacement vs actual cash. Never ever do actual cash. If you do get replacement - It really doesn't matter what this replacement value is. Every insurance company uses the same software Xactimate to adjust (or cheat) you. Replacement value plays no role at all during estimating. It really doesn't matter if the house insured at 600k or 240k level, software pays the same.

In event of the total loss - they do NOT pay the "replacement value" specified in your policy. 240k comes from some checklist / evaluator thingy that determines the value based on some parameters insurance company controls. 240k could be a real value, may be they excluded basement figuring out it will not be damaged. THis value also could exclude the value of the lot.

In event of a partial loss - hire the most expensive contractor and tell your <expletive> adjuster to deal with him. That you will NOT be paying one dime other then deductible over and expect the matching pair, everything to the highest available level. No entry level doors, cabinets, finishes, etc.

In event of the total loss, unless the structure is completely gone - they will cheat you like a dirtiest crooks, pretending and avoiding paying.

If your structure is gone they will pay to have it rebuilt so it really does not matter, but if you want to cash out .. they will pay market value - minus depreciation.

You told you agent what it cost you to build - that is all that matters. No reason to worry. Make sure that other belonging are properly covered.

Thank you, Kate E!

I might add that we built in a remote tall pine forest, and that wildfires are a seasonal hazard. Getting coverage was a bit of a challenge, so shopping around for a different insurer may not be an option.

BT....Why not get “actual cash?” I’m having trouble understanding all of this, but maybe they really don’t want you to understand what you are buying.

Also take a look at a blog called Chris Loves Julia. They had a fire that destroyed a vacation cabin they were rehabbing and it sounds like they lost out on the work put in eventhough they had receipts.

Hi flopsycat1 - I am an insurance producer and can provide some insight! All companies will have variation and depending on the exact policies not everything I say could be true. However, most home policies are replacement cost policies. They should be using an estimator based on the details of your specific home to come up with replacement cost OR use the appraisal( especially given that it is new and you know exactly what it cost to build) to set the dwelling coverage. In the event of a loss the company would pay up to the dwelling coverage (or a % over if it has an extended replacement cost) to repair or rebuild your home. The replacement cost estimate is a guide to determine coverage but they will not use that against you if it says you have carpet and you actually have hardwood. In that case you would be paid out for the cost of hardwood. If you chose not to rebuild the home and wanted to "cashout" I don't know how your company would handle that specifically - but my guess would be in that case so long as you are rebuilding in the same area it would be paid out for a similar construction home as the one that was a total loss. You would just be on the hook for the land as the insurance only covers the structures and your personal belongings and would not pay to relocate you to a new plot of land. Hope this helps!

Thank you, Rebekah!

Since this is a second home, what could we expect if we decided not to rebuild at all? Would we only be reimbursed for replacing the house we lost?

First of all..it doesn’t matter what they tell you because none of it is the truth. They are not your friends. Not your agent, the adjuster(s) or any of them.

second of all..the wording in your policy is so confusing and ambiguous (and meant to be) that even your attorney will have trouble deciphering it.

third of all...if you have a fire you better just hope it burns to the ground.

if you really want to get good advice contact a public adjuster and let them talk to you about what you should do. When we had our fire, he was the only person on our side that actually knew how to handle those bullies that are supposed to be helping you.

Following

Based on my experience with house fire (had to be torn down to studs) & insurance, agree with BT and ILoveRed.

Would not over-insure, had plenty of insurance coverage, did not mean they were willing to pay out the costs.

Insurance companies are in business to make money, the less they pay out - the more $$$$$$ they make.

In my experience, here's how home insurance works:

- You pay big premiums every year.

- Nothing big happens to most people's houses, so few people file claims.

- Little things aren't insured,so few people file claims.

- The insurance people build big buildings and put entertaining commercials on TV.

- The end.

Seriously, I've been paying home and car insurance for 30+ years of my life, and I've never had a single penny back from any of it. Oh, I understand the concept: If next year's "my turn", and my house is ruined, I'll be glad to have it -- but I've paid out an awful lot of money with zero return in the meantime.

OP, I'm on the other end of the spectrum: Last year I tried to REDUCE my insurance. Why? Because I would like to reduce my premiums (which I definitely must pay) and accept more risk for the house (which will probably just keep sitting here without problems). Our house represents about 5% of our total wealth, so if it were to be destroyed today, we would hurt -- but we would be far from devastated. The insurance company wouldn't do it; said they couldn't do it. Said they cannot insure for less than replacement value. I meant to look around for other options, but I lost the momentum and just "paid up" another year.

Other thing not mentioned above us if there is a mortgage on the home the funds go to them to distribute out. They need to be made whole first.

To understand your homeowners insurance you need to focus on two things, the concept of replacement value and the terms and conditions that govern the circumstances that must occur to justify a claim. Replacement value is not really determined by what you paid for something at the time of it's original purchase, it's what it will cost to replace the item at the time of the claim. When you initially take out a policy they evaluate a replacement cost at this point in time in order to establish your payment, this should not be construed as a limit on what will actually be paid in the event of a claim. They will pay out whatever it costs at the time of the claim, this may be more or less depending upon changes in cost over time or specific limitations outlined in the terms and conditions.

I believe in most cases problems arise as a result of the terms and conditions. These unfortunately can be very complex and confusing and as they must be written in legal jargon they can be extremely difficult to understand from a lay persons perspective. These terms and conditions can vary greatly depending upon the local/region you reside in and the regulations imposed on the insurance company.

Our moving truck had an accident when were moving from Calagry to Creston we lost about 45K of furniture , bikes all was covered by full replacement insurance and yes the insurance company always wants to cut its losses but in the end they covered everything but no without huge work on my part to hunt down pricing for identical pieces . If you do not use your home insurance for moving accidents you are stuck with per pound coverage from the movers BTW

My previous house was a vintage property with expensive elements like a tile roof, copper gutters and gorgeous trim and flooring. The replacement cost on the insurance policy was about three times the market value of the house. I was concerned that an insurance company might not pay to have damage replaced with similar quality materials and workmanship. Our agent said that there are different categories for houses and we paid a bit more to have our property upgraded to a higher rating. I was more concerned about the possibility of getting an appropriate repair for partial damage rather than a complete loss. In case of a complete loss, we could have built a fantastic new house with the insurance proceeds.

My mom told me that their policy would provide extra money as needed to build a replacement house but only on the same property. If they chose to rebuild elsewhere or just buy something else, the payout would be the insured amount.

Lyndee Lee, we are in a similar situation to yours right now. We are in a 95 yr old house with many of the same features: tile roof, copper, art glass windows, marble floors and baths. We purchased it for 300k, the market value may now be 350k, but it is insured at a replacement value of 700k. It could have been higher, but we went with a "like kind and quality" materials policy rather than a full restoration policy. From what I understand and what I have seen in practice, it means if our tile roof is destroyed, they will cover a new tile roof, but they will not cover a tile roof made of reclaimed tiles from the same vintage and maker. We had a chance to test out our insurance on the roof actually, and even though the adjuster never expected it to cost $36k to simply repair the tile roof after a large tree branch did some major damage, they did cover the full amount.

Years ago, we had a tree branch come down on our tile roof and the roofers searched quite a long time for matching tiles but only found trim tiles, not field tiles. They had samples made but it took two rounds of multiple options before the results were reasonably close. We were able to remove original tiles from the back of the house and hide the replacements where they weren't visible from the street. It was about 10 years ago and our roofers really underbid the job...perhaps that type of experience is why you got charged $36K instead of our much smaller price tag.

DO NOT OVER INSURE. It adjusts the same.

Say dear adjust CROOK, scumb*g of LibertyMutual, my contractor will be installing $3000 patio door that I like, it is similar in quality to what I had, that make believe $700 Xactimate scum estimate for a pre-warped lowes door that also pretends to includes labor, taxes, overhead and proffit is not fooling anyone including you. By the way dear crook adjuster why did you NOT include the painting of this door, and a new trim: do you think exterior doors does NOT needs to be painted. Did LibertyMutual corporate entry Doors are unpainted with no TRIM? These people are scum of scums, crooks of crooks, liars of liars. Friends don't let friends by LibertyMutual insurance.

Our crook: adjusted with R13 in the attic, than he would pay for insulation above the room skip a hallway, and pay for another room (like you could skip cellulose removal) like a dirtiest fraudster, instead of clear mapple - use 2" pine baseboards than do not include paint or stain, use unfinished doors, 3/8" subfloors, reset the counters (pretending that you can undo the top and reset it to a new counter), instead of vaults materials - crook makes ceiling flat to cheat on the material, replace floors in a bathroom but did not want to pay an allowance to remove the toilet. I lost count of his dirty tricks, his lies. Number 3 - insurer in the USA. Solid 5*.

Don't let the adjuster to determine what is "like" quality, do not let the adjuster determine if he want to pay for it or NOT. It is You who has to be in charge.

I have a 160 year old house. I have not had to use our insurance, lock on wood. We purchased a plan specifically for older historic homes that would cover the cost of higher price tag craftsmanship to be able to restore to original character using original type materials - plaster walls to be replaced with plaster not with drywall - that kind of thing.

the stone should stay closer to the foundation

Never used insurance, until bought wifes dream property. Six month later hit by tornado. Had to deal with crooks, liars, shyster, dirty DONAN engineers (feel free to google), dirty appraiser (x adjuster who concealed his employment). Industry of crooks, industry of liars, industry of cheats and scums protected by US government.

Our DONAN engineer: with massive leak on the left side of gable and the right side, leak in the center - proclaimed a year later that mold was not caused by massive leaks: left, right, center rather pre-exists inadequate ventilation. 1960s he found insulation overspray (baffles were not invented yet) - he declared moisture even when underside is not damaged. This is type of crooks you will be dealing.

Anyone who call ALL [fill in the blank] crooks and worse, probably deserves the service they receive.

I'll add that you should keep a video file of all of your belongings contained within the house. Take a video doing a room-by-room survey of the contents and keep the file somewhere like a thumb drive in a safe deposit box or similar. Since this is a vacation home and you do have a primary residence, you don't have to consider the cost of rent while the new home is being built. But that should absolutely be part of the equation if this had been your primary residence.

Lyndee Lee, our tiles were made by Ludowici, who's name was stamped on the back of the tiles and is still in business today. The new tiles are the same shape but noticeably lighter. Over time they are supposed to age down to a similar color as the rest of the roof, or if we got impatient there are stains that can be used to artificially age them. As far as the cost of the repair, that was to pull up all of the tile over probably 800 sf of roof area, lay down new underlayment, replace all of the broken pieces, and refabricate a crushed copper clad dormer vent. So a pretty major project indeed.

Our two insurance experiences (the first was with the bank's insurance while we were closing and the copper downspouts and sections of gutter were stolen off the house) both were a serious pain. They involved a lot of work and calls on our end to make sure that things happened right. And often times we did have to fight for our cause. Like when the bank's insurance couldn't manage to find a company that did copper gutters, and asked wouldn't we rather just have aluminum? Or if not we would need to find the company to do the work and get a quote even though it wasn't even our house yet.

Or with the roof and interior repair, the adjuster would often forget or deny things that they said previously (always follow up phone calls with record emails). To their defense they were obviously really busy with many projects, but nothing like having them walk back on things that were already believed to be approved after the work was already in progress. And everytime they wrote a check, the process took weeks to iron out correctly. Then the first contractor doing interior repairs way overcharged insurance for what we see as inferior quality (they painted our trim with a roller, applied latex right over oil, drywall compound right over plaster, acrylic right over oil, and we were having several wall and paint failures just months after the job was complete). Then they determined after doing just 1/3 of the job that they weren't qualified enough to work on our caliber of home but billed insurance for almost the full amount of their original quote and said we would have to fight with the adjuster to get more money. So yes, the process of actually getting repairs done was some of the most painful contracting we have ever done.

The insurance company is your friend, until you file a claim, then they are your adversary.

Our entire house was burned to the ground in CA wildfires. Luckily we had replacement cost insurance unlike some of our neighbors who only had the minimal insurance required by the mortgage lender. The replacement cost which included demo of the existing cement foundation, haul out and rebuilding the entire house was paid for and all of our belongings were replaced. We had purchased the tract home for about $650k five years before the fires. The replacement cost was well over $1 million and was now a custom home. We sold that house for $1.5 million. Our insurance company was great throughout the process. I've heard a lot of horror stories about insurance payout, but there are exceptions, luckily for us.

Suzyq- Sounds like your insurance company was the silver lining to a bad experience. Would you mind sharing the name of the insurer?

AAA but they no longer do home insurance after huge exposure in CA, although some are grandfathered.

Suzy...what saved your a**.....your home burned to the ground. See my note above.

the insurer has nothing to do with it.

Lisa...I hope you never experience a fire or the loss of your home because its the worst thing my family has ever been through other than the death of my young niece who was the mother of four young sons. I wouldn’t wish it on anyone. No, not even you.

The insurance companies should do what they promise to do but instead they do everything to avoid paying even if that means spending more money trying to get out of paying than if they just fairly pay to start with...

Sorry to hear of everyone’s claims challenges. We live in the Midwest . In 22 years as State Farm insureds, we have made 2 separate claims in 2 different houses for hail damage. We have replacement value insurance. For each claim, I submitted our preferred roofing contractor estimate to them directly and we were reimbursed to replace the original roof. We did pay ourselves to upgrade each original roof to an architectural shingle but I can’t complain about that. They also paid us the full replacement value of a copper roof which was very pricey. In our experience, we have found while the premiums aren’t the cheapest, they have come thru with claims.

The answer is it depends. Do you have replacement cist coverage? I worked in commercial liability insurance and wrote a policy, yet I struggle with today’s mess of homeowner’s coverage. You really do need to find out which carrier writes the bulk of policies where you live and find their top agent. Not always an easy task. Call your states department if insurance as it is a state regulated industry. No one ever buys enough coverage as the removal costs of burnt debris is always forgotten. Dispute the estimate IN WRITING and ask ins dept for guidance or private attorney until you find a good agent. Policies can be brokered to new agent midterm or cancelled usually w 5% penalty if mid policy period and rewritten w new agent. Agent get commission higher on new policies generally. Be persistent. Know elderly folks that did not take my advice and up limits and list everything- substitute housing ran out after a few months and they are paying huge maintenance fees on place not there! Good Luck- feel your pain!

Do you qualify for USAA- call them they have higher premiums but pay claims for the most part!

Chubb is a company for high valued homes- such as in gated community and with fine art china wine collection good amour of expensive jewelry. Chubb/Ace last I knew = cadilac of insurance. Always but replacement cost coverage which will pay you to replace not the actual cash value due to depreciation- stuff getting old!

Thanks, frenchaus! We have a meeting scheduled with Chubb. Looking to get more insight into options. Currently, our primary home and vacation house are insured by different companies. We are hoping that Chubb will help us to bundle them together.

Homeowners premiums in different states vary widely, and depending on where you live, The average cost of home insurance may vary. Know your mortgage rate by taking an advice through Prestige Capital Corporation which is a good option to get factoring receivables.

flopsy - We now have everything insured by one company. Rentals, primary, cars etc. Its important because we get discounts for this and because we also have one umbrella policy that will only include the properties and vehicles they issue policies on. Chubb wouldn't insure our primary so we couldn't use them, but if they will insure your's, consider bundling with auto coverage too.

And just to mention, Chubb paid big when our friends had a major hot water tank failure into their sunken living room while they were out of town for two weeks. The hot water just sat there causing damage not only to that room, but to all the belongings, flooring and drywall in the house. They were out of their house for 5 months. The insurance paid for an ocean front hotel for 2 months and all their meals, then 3 months in a furnished ocean front rental house. They eventually got their home repaired and paid out of pocket to upgrade much of it. Also new furnishings So that was good coverage, but then Chubb immediately cancelled their policy.

^^that part just kills me. They immediately canceled their policy. That’s the biggest thing that drives me nuts about insurance - pay info for years and then the one time you have a claim they jack up your rates. The example above seems extreme- huge claim & canceled policy, but same concept.

have a complaint? Call your state insurance department.

> have a complaint? Call your state insurance department.

They are useless. Insurance company will write a reply, where the adjuster and supervisor will blatantly lie, stating something they know is not true. State Insurance department will close the case forwarding insurance company reply [lies] to back to you and close the case, advising you to take the matter to a court. They have certain dirty judges will make up new rules, take documents outside of discovery and make up some facts, citing non-existing documents.

My friend did better, he packed and visited the adjuster [wife], waiting for the adjuster to leave. Settlement was within 10 days.

And just in case someone want to know how this is done for example... here:

Damage in the family room .. wet half wall, connecting soffit , ceiling, exterior wall, and the water leaked into a fireplace and on other room side another part of ceiling, tornado damaged door, baseboards:

The adjuster pays:

R13 in the attic instead of R38, pays for a bogus 2" paint grade baseboards $1.40lf, exterior wall drywall, install carpet - lowest grade, OSB 4'x4'; re-nail interior door (as exterior door fix)

What the adjuster did not pay:

R38 insulation, 20'x14' ceilings, 3"-1/4 baseboards clear maple stain grade - $3.50/lf, stain the baseboards, new trim around the window and staining, the insulation behind the wet exterior drywall, paint the drywall [what bag pays for unpainted walls], remove/install/replace drapes next to the windows, half wall + soffit drywall and paint, repairs to the flooded fireplace, the carper removal [not just install], 20'x14' subfloors, and remove and replace exterior door + paint the exterior door + trim.

Is that 20 cents on the dollar or 10 cents on the dollar? Best insurance - LibertyMutual.

Homeowners Insurance is a racket whereby 90% of the insured provide coverage for the 10% of people whose homes are lost to (whatever) because they want to live in areas with a high probability of natural disasters.

Better than the system of insurance scum and crooks and you Lisa.

He was not my real friend by I fully endorse this as a better way to settle claims with insurance companies.. " he packed and visited the adjuster [wife], waiting for the adjuster to leave. Settlement was within 10 days." and may be even follow respectable family to a park...

It has been few years, I am coming too, to pay the proper respects.

chiflipper - I don't think that's quite right.

BT, I hope you've calmed down by now.

"That's really interesting for me!"

Why is that?

"I've never understood this. That's too hard to understand."

Understood what?