On Sun, 12 Sep 2004 03:23:30 -0700, Joshua Putnam
wrote:

| In article ,
| says...
|
| I could reduce the amount of the coverage, of course, and lower the
| premium somewhat. But do I, a mere homeowner, really know what it
| would cost to rebuild if my house was burned to the ground? Doubtful!
| So like most of us poor saps, I am forced to keep the amount somewhat
| larger than I think I really need -- or else get some sort of
| re-appraisal every year, which I doubt anyone would do.
|
| Actually, that's what some insurance companies now do -- instead of
| storing a preset dollar amount in their computers and increasing that by
| some blanket percentage every year, they're storing dozens of data points
| on the home and running a new replacement cost estimate every year at
| renewal. Most don't invent the formula themselves, they use Marshall &
| Swift/Boekh or the like, with regional factors for labor and materials
| costs. This does require the insurance company to know more about your
| home, but it also allows a more accurate increase in cost for different
| styles of construction. And it helps avoid E&O claims when you have a
| total loss and discover your automatic increase was indadequate.

Maybe that's the formula mine uses. I don't actually know what method
they use for their yearly escalator. The amount always seems a little
high to me -- but as I said, I still don't know what the real amount
should be and have no convenient or trustworthy way of finding out. I
think it is prudent to be conservative on this issue, so I let the
higher figures the company provides stand. I am sure that their figure
is not too low, at least.

The policy also has replacement value insurance for the contents of
the house, too. This also rises yearly by some escalator, although it
does not rise as rapidly (which makes some sort of sense). Of course,
there is no way for the insurer to know if we have bought new
furniture or not, or how much the value of our antiques has risen.

What I think is that basically a "replacement policy" is no longer
really a replacement policy. No matter what formula or percentage is
used, setting the upper limits is still conjecture and knowing what
the replacement value is still boils down to negotiation after a
disaster. Fortunately, my insurer currently has a very good industry
reputation, and friends of ours whose home unfortunately burned to the
ground were quite satisfied with the eventual settlement.

|
| --
| is Joshua Putnam
| http://www.phred.org/~josh/
| Books for Bicycle Mechanics and Tinkerers:
| http://www.phred.org/~josh/bike/bikebooks.html