Home-owners insurance from Farmers


Just wanted to bounce something off the group.
I have recently received a quote from Farmers insurance for home- owners. They put the price at rebuilding the home at about $181,000 but the tax roles list my house at $100,000. Should my house burn to the ground, would it indeed cost $181,000 to rebuild or is Farmers just padding the coverage?
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Tax assessments have nothing to do with real cost. The tax assessor places a market value on a house and by law, the actual assessment is a percentage of that. The tax mil rate is set by dividing up the town budget by the total value of the real estate on the tax roles. It has nothing to do with the real cost of rebuilding. That is a function of the design, material cost, and labor to repair it.
As a homeowner, learn the budget process, learn about re-evaluation, and go to the town meetings and voice your opinion. Only educated taxpayers can control the local politicians.
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I forgot to mention, learn about co-insurance. That is important if you ever think about reducing the amount of insurance you have just to reduce the premiums. If you house is worth $180,000, you may figure it will not be totally destroyed so you only want $90,000 worth of insurance. Then you have a claim for say, $20,000. Since you elected to have only half the house insured, they will only pay half and you get to pay the other $10,000.
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says...

If he has a mortgage, the bank may consider it quite differently.
Banty
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Typical insurance rates for cost of replacement range from $110 - $150 per square foot. IF your county has your house listed below this figure, you'd be best off just keeping your mouth shut. That is, unless you like paying more personal property tax. Ours are all rated about 20% HIGHER that what we could ever hope to get for them and we've appealed and appealed and nothing changes. Enjoy it whilst you can.
--
Steve Barker



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snipped-for-privacy@yahoo.com says...

More often, homes are under-insured, not over-insured.
Your tax valuation is the cash value of a used house, your insurance would have to pay to build a new house.
The coverage for your home would be calculated based on the cost to rebuild it, given its size, style, features, and local cost of construction. Costs vary widely depending on location, around here, $100/square foot gets a plain square box tract house, and high-quality construction can exceed $200/sq ft.
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snipped-for-privacy@yahoo.com wrote:

Tax values do not equal selling price or replacement cost. They are tax value. In many areas they are, by law, a % of 'True Value" which would be selling price in a free market. Some areas mix the land and the home together some show them separately.
I have no way of knowing what your home would cost to replace. Farmer's should have people who's job it is to set that value. You could call and ask how they come up with their values and you might also ask how that effects you (higher cost of premiums and more complete coverage)
--
Joseph Meehan

Dia \'s Muire duit
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snipped-for-privacy@hotmail.com says...

Typically insurers use a replacement cost estimator from Marshall & Swift/Beokh. This gives a base cost per square foot depending on the style of construction, with adjustments for all sorts of features such as number of bathrooms, style of kitchen, fireplaces, sliding doors, central air conditioning, etc.
As others have noted, this has nothing to do with market value. Depending on your local market, homes could be selling well above replacement cost if the market is hot, or well below replacement cost if the local economy is depressed.
Taking my own house as an example, I paid $131,000. At least $60,000 of that is the value of the empty lot, so the market value of the house was $71,000 or less. Buit it's a hundred-year-old Dutch Colonial with wood floors, high ceilings, wide crown molding, etc. Rebuilding it in today's construction market would be around $200/square foot.
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snipped-for-privacy@yahoo.com wrote:

If the house burns to the ground, you still have the slab and a good portion of the plumbing. That's worth a pile of bucks right there.
Call a realtor. Find out what your house is worth.
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That's what the current house would sell for.
For *replacement*, it's what a comparable house would cost to be built on that site, with current codes and current construction costs. Quite a different thing.
Banty
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In most cases you will have to take the slab out and start over. I would not trust any plumbing that had been heated that much. Don't forget the cost of having the remains removed.
--
Jim Rusling
More or Less Retired
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Jim Rusling wrote:

I meant the under slab/ground plumbing.
We had a hippie try to commit suicide in our neighborhood by running a hose from the gas log lighter to the bedroom. Then he went to sleep. A couple of hours later he woke up and lit a joint.
After clearing away the rubble, a new house was built on the old slab, exactly like the first. But without the hippie.
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wrote:

Other responses mostly pretty good -- only one point I didn't see mentioned. There's a thing about "underinsured" that can bite you if you decide to insure the property for less than (typically) 90% of replacement value. This is a clause that is there precisely to prevent a deliberate underevaluation to obtain lower premiums, typically to satisfy mortgagee's requirements. Be certain to have a realistic replacement evaluation and if not comfortable with the insurance company's estimate, get a ballpark estimate from other sources for comparison. You can also get what is known as an "AV" (agreed value) policy where the contract states the stated value is the "agreed value" and there will be no question on paying up to the limit in case of loss.
The under-insured clause could be a bite in the case of the suggested "co-insured" plan unless that were made clear and agreed to by the insurance carrier in the policy at the time of the underwriting. In order for them to agree, you would probably have to place the funds in an escrow account or otherwise encumber other funds in some manner. It's fairly common for larger businesses to "self-insure" some risks, but far less so for individuals to do so (on a formally planned basis, anyway).
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On 31 Jan 2007 18:36:24 -0800, " snipped-for-privacy@yahoo.com"

Insurance companies and agents are all crooks. Contact your lawyer. The lawyers fee is worth the savings the insurance asshole fucks out of your wallet.
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