home insurance (valuation of home too high)

[upupnorth]

We bought a house last year. I received a renewal for house insurance.

I know house prices have gone up but not much where we live (rural area) and even though the premium went down by a whopping $8 I am concerned that their valuation of the house and its associated "private structure" - a shed that is virtually falling apart- is at least 15K too high.

Is this worth pursuing with my insurance agent and/or what are some of your experiences? Thanks!

[Audiogenic]

Try www.kanetix.ca

Belair Direct and Meloche Mennox (university alumini) are OK for some too.

[Jacklad]

We bought a house last year. I received a renewal for house insurance.

I know house prices have gone up but not much where we live (rural area) and even though the premium went down by a whopping $8 I am concerned that their valuation of the house and its associated "private structure" - a shed that is virtually falling apart- is at least 15K too high.

Is this worth pursuing with my insurance agent and/or what are some of your experiences? Thanks!

I've been bitten in the opposite direction (valuation too low) - trust me, I'd rather have the extra 15k of wiggle room, especially as costs for replacement/repairs are only likely to rise, not fall.

In our case, the insurance company paid out 100% of the claim, but it just wasn't enough - the valuation had been done years previously, and didn't accommodate the subsequent change in costs. We went down large on the house fire - never again.

Jackie

[brew99]

I'd have to agree with Jacklad, it is better to be overinsured than under. besides, I really dought that 15K would make much difference in your premium.

You could also look into insurance that provides you with a "blanket" coverage, that way the replacement of the house is not limited to an exact limit (other than the blanket limit which is tipically a millions or two).

Not all house insurance plans are created equally, and you really need to understand what you are buying.

[Bazooka Joe]

I also agree with Jacklad, especially if your home is newer rather than older. Newer homes burn quickly and damage gets out of hand fast.

OTOH, older homes usually cost more to replace for the same amount of damage.

A good example would be that shed. You say it's a POS as it stands. If it were to burn to the ground, how much would it cost to replace? If it's wood with a shingled roof, it'd be minimum $1k-$2k (for someone else to rebuild without shopping around for a deal). Although it's not worth that to you right now, it would cost that to replace.

Either way, it's almost impossible to rebuild a home for the market value of it. If it were possible, home builders would be out of business. Only having 15k of wiggle room would be too little for my liking. That's the thing about insurance though, it's sort of like gambling (or stocks, etc). You have to find the risk/reward level that you are personally comfortable with and go with it.

[upupnorth]

Thanks for those useful replies! Interesting to hear the other side of being underinsured after a terrible fire. I suppose I shouldn't sweat a bit of an increase in valuation but I was simply assuming here that the insurance companies never do anything for my good! :-) Thanks everyone for chiming in.
p.s the only thing that still bothers me is that our shed is valued at 23K!

[pitz]

I don't know much about insurance, but shed fires usually/often burn down more than just the shed.

Plus you might have firefighting costs as well. And if you are storing toxic materials in the shed, there might be clean-up costs that you would want be able to claim if there was a fire.

Just as an aside, I heard on the radio a few months back about some copper thieves in Halifax/Dartmouth cutting copper lines from oil tanks to appartment buildings and houses. In one instance, the cost of the environmental clean-up was approximately $1 million as several hundred litres of heating oil spilled onto the surrounding soil. A terrible loss to suffer for a few dollars worth of copper, and one that may not typically be anticipated when you go to purchase insurance on a building.

[Bazooka Joe]

I don't know much about insurance, but shed fires usually/often burn down more than just the shed.

Plus you might have firefighting costs as well. And if you are storing toxic materials in the shed, there might be clean-up costs that you would want be able to claim if there was a fire.

Just as an aside, I heard on the radio a few months back about some copper thieves in Halifax/Dartmouth cutting copper lines from oil tanks to appartment buildings and houses. In one instance, the cost of the environmental clean-up was approximately $1 million as several hundred litres of heating oil spilled onto the surrounding soil. A terrible loss to suffer for a few dollars worth of copper, and one that may not typically be anticipated when you go to purchase insurance on a building.

Outside oil tanks are a HUGE hazard. If it spills on the ground, and the ministry finds out about it, they start digging. If the oil goes down to your foundation and underneath, the house has to completely come down for clean-up. You heard me right, a spill or leak of an oil tank can result in the entire house (foundation and all) being removed. In cases like this, it is highly likely that insurance will not cover the complete cost unless you've got a rather high blanket policy.

If there is ever an oil/fuel/etc spill and you're talking to a firefighter, life is much better if it's less than (IIRC) 4 gallons, since they don't have to report it.

[CompWizrd]

My house is worth around 105k market value.. yet the insurance company has it insured for 335k for some reason.

I figure it can be rebuilt with contents twice before the insurance money would run out...

[BillyH]

Not sure how the insurance works in NS but many of the companies I've talked to in ON automatically insure one outbuilding for up to $20,000. If it's the same in NS (which is may not be), you wouldn't need any insurance on your shed. (although I'm not an expert).

[brunes]

I've been bitten in the opposite direction (valuation too low) - trust me, I'd rather have the extra 15k of wiggle room, especially as costs for replacement/repairs are only likely to rise, not fall.

In our case, the insurance company paid out 100% of the claim, but it just wasn't enough - the valuation had been done years previously, and didn't accommodate the subsequent change in costs. We went down large on the house fire - never again.

Jackie

This is why you are always supposed to opt for a "replacement value" insurance policy. Such a policy is guaranteed to *REPLACE* your house, regardless of if it costs the amount insured for or 10 times more.

I am pretty sure my current policy undervalues my house by about $30,000 or more. But when I asked the agent about this they assured me I am covered for replacement of the house, regardless of the cost.