# House insurance increases



## STech (Jun 7, 2016)

I knew, and expected to be paying more insurance due to the recent increase in floods in Ontario, but c'mon, my renewal rate next year will be 65% higher than it was 5 years ago. Absurd to say the least. I'm shopping around obviously, and I have a question that hopefully someone can help with.

The biggest question I have is replacement cost. One company quoted me as 500K, while the other at 380K. The 380K does however provide "replacement cost" up to 700K. So what gives here? I don't want to under or over insure myself, but I can't really figure this major difference out. There is a 50% price difference between the two companies.


Thanks in advance.


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## OhGreatGuru (May 24, 2009)

1. Shouldn't you be asking the companies you got the quotes from to explain the coverage? We certainly don't have copies of their policies.

2. You also haven't said whether or not you are in a defined flood hazard area.

3. Usually when insurance companies make these kinds of increases they send out some information trying to explain them. Do you read your mail?


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## STech (Jun 7, 2016)

OhGreatGuru said:


> 1. Shouldn't you be asking the companies you got the quotes from to explain the coverage? We certainly don't have copies of their policies.


I'm waiting on the second company to provide me with the full policy wording before I sign up. I wanted to get some independent info, instead of just relying on the company or their sales reps.



> 2. You also haven't said whether or not you are in a defined flood hazard area.


The designation for my area hasn't changed in the past few years. But from what I've heard and read, insurance rates in Ontario have been going up very steadily. Partly because of the increased floods, and partly because of the Liberal government debauchery.



> 3. Usually when insurance companies make these kinds of increases they send out some information trying to explain them. Do you read your mail?


I read every little detail I get my hands on. Last year they sent me a little pamphlet talking about how insurance is changing due to the floods, and how now they offer "overland water protection". This year I got nothing with my renewal, except for another 19% increase in rates. Needless to say, they lost a customer.


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## Mukhang pera (Feb 26, 2016)

STech said:


> The biggest question I have is replacement cost. One company quoted me as 500K, while the other at 380K. The 380K does however provide "replacement cost" up to 700K.


I must confess to not understanding the foregoing. You say one company quoted, using a replacement cost figure of $500k. The other based its quote on a replacement cost of $380k, but heck, that can be stretched to $700k in a pinch. Probably just my own lack of knowledge in these things. OGG evidently had no difficulty in comprehension.

I went along with the same insurer, quite complacently, starting off with an annual premium of about $3,000 ten years ago. Last year they wanted $5,400, explaining when I emailed that the underwriters decided that replacement cost had jumped from something like $650,000 to something like $800,000 (I do not recall the exact figures). That motivated me to shop around and I managed to get the $5,400 cut in half.


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## Mortgage u/w (Feb 6, 2014)

Mukhang pera said:


> I must confess to not understanding the foregoing. You say one company quoted, using a replacement cost figure of $500k. The other based its quote on a replacement cost of $380k, but heck, that can be stretched to $700k in a pinch. Probably just my own lack of knowledge in these things. OGG evidently had no difficulty in comprehension.
> 
> I went along with the same insurer, quite complacently, starting off with an annual premium of about $3,000 ten years ago. Last year they wanted $5,400, explaining when I emailed that the underwriters decided that replacement cost had jumped from something like $650,000 to something like $800,000 (I do not recall the exact figures). That motivated me to shop around and I managed to get the $5,400 cut in half.


wow....I no longer feel bad for the premium I pay. A similar value coverage here in QC is no more than $1500!


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## Mukhang pera (Feb 26, 2016)

Mortgage u/w said:


> wow....I no longer feel bad for the premium I pay. A similar value coverage here in QC is no more than $1500!


It's our punishment for living off grid. No fire hall down the street. Not that that seems to matter a whole lot in reality. Having seen a few house fires in cities, it seems that by the time the fire reels (I just recalled my granny using that term) get there, the place is pretty much a goner. The task is to keep fire from spreading to the other cheek-by-jowl properties.

Let me offer kudos to Allstate, the insurer of our SoCal house for 20 years. The premium this year was $1,800 with a replacement cost in the range of $750,000. This year's premium is little more than it was 20 years ago and about $400 less than it was a few years ago. Although, with all the recent CA fires, next year all bets might be off.


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## STech (Jun 7, 2016)

Mukhang pera said:


> I must confess to not understanding the foregoing. You say one company quoted, using a replacement cost figure of $500k. The other based its quote on a replacement cost of $380k, but heck, that can be stretched to $700k in a pinch. Probably just my own lack of knowledge in these things. OGG evidently had no difficulty in comprehension.
> 
> I went along with the same insurer, quite complacently, starting off with an annual premium of about $3,000 ten years ago. Last year they wanted $5,400, explaining when I emailed that the underwriters decided that replacement cost had jumped from something like $650,000 to something like $800,000 (I do not recall the exact figures). That motivated me to shop around and I managed to get the $5,400 cut in half.


I'm finding out a bit more today as I continue to shop around. The 380 replacement is for the house only, and then 700 is total limit of the policy. So from what I'm told, even though the house was appraised at 380 to replace, if it'll take 500, then they'll pay it, but it'll only leave 200 for contents, my garage, hotel pay, etc. I'm not sure if those numbers are good or not, but it's starting to make a little more sense. 

And there's no doubt insurance companies count on complacency. I always shop around. What was holding me back previously was my oil furnace. Very few companies want to deal with oil tanks these days. But now that I'm on propane, lots of companies are eager for my multiple policies. So it's adios to the gouging company. 

And yeah, the joke with the fire department is that they show up just in time to save the basement . My neighbour is a fire fighter and a good sport about all the jokes.


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## STech (Jun 7, 2016)

Question. Does anyone have, or have thought about earthquake insurance? One of quotes I got includes that at an additional cost, which I don't believe my current policy has.

And as an aside, a quick reminder that it pays to shop around. The quotes I'm getting now, are 35% cheaper, and possibly even more if I bring the autos over as well. It really pays to shop around. Loyalty means nothing.


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## Mortgage u/w (Feb 6, 2014)

STech said:


> Question. Does anyone have, or have thought about earthquake insurance? One of quotes I got includes that at an additional cost, which I don't believe my current policy has.
> 
> And as an aside, a quick reminder that it pays to shop around. The quotes I'm getting now, are 35% cheaper, and possibly even more if I bring the autos over as well. It really pays to shop around. Loyalty means nothing.


I hate insurance. I like to 'self-insure' so the less the coverage and premium, the better. Don't get me wrong, I have a good basic coverage......but I won't over-extend to insure jewelry, cash, shed equipment, pool, etc. I keep my deductible high since I know I wouldn't make a claim under $1000. 

As for shopping around, I change every 2-3 years. Loyalty seems to have been redefined to 'sucker'. I have always been treated as a king when signing up as a new customer - I get all the discounts and freebies. Its funny because when I change, I keep using the same 2-3 insurance companies but they seem to forget that I was once their customer!


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## STech (Jun 7, 2016)

Mortgage u/w said:


> I hate insurance. I like to 'self-insure' so the less the coverage and premium, the better. Don't get me wrong, I have a good basic coverage......but I won't over-extend to insure jewelry, cash, shed equipment, pool, etc. I keep my deductible high since I know I wouldn't make a claim under $1000.
> 
> As for shopping around, I change every 2-3 years. Loyalty seems to have been redefined to 'sucker'. I have always been treated as a king when signing up as a new customer - I get all the discounts and freebies. Its funny because when I change, I keep using the same 2-3 insurance companies but they seem to forget that I was once their customer!



Amen to everything you said. I'm the same way, I try my best to calculate the risk, and only pay for what will seriously hurt my pocket. Extended warranties make me laugh, deductibles under 2000 don't interest me, comprehensive coverage on an older car is silly, and I likely won't make any claim under $5,000. The earthquake rider, has me pondering it a little. I simply don't know enough to make a decision at the moment. Given the increase in flooding the last decade or so, I've opted to pay the extra $100/yr to cover against overland water. 

My current company has, what I consider to be an out right joke, something called premium freeze or something. For an extra $75 a year, if I make a claim, then my premium won't go up for 1 year after the claim, then after that it'll be shoot up to reflect the claim I made. I suppose someone will get suckered into it, and consider it a good deal. 

I shop around every year, for all of our policies. Like I said earlier, I was a little limited with a country property having an oil tank onsite, but not anymore. It's a little sad fact about living in a rural area where you have no access to natural gas. Very few insurers want to deal with oil, or wood heat.


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## Mortgage u/w (Feb 6, 2014)

STech said:


> ....The earthquake rider, has me pondering it a little. I simply don't know enough to make a decision at the moment.....
> 
> My current company has, what I consider to be an out right joke, something called premium freeze or something. For an extra $75 a year, if I make a claim, then my premium won't go up for 1 year after the claim, then after that it'll be shoot up to reflect the claim I made. I suppose someone will get suckered into it, and consider it a good deal.....


I haven't put much thought into earthquake coverage. My initial thought is we don't really have much concern when compared to other countries. Also, we don't have concrete built homes so how much damage can a home really sustain? I wouldn't overthink this one.

I like the premium guarantee feature some companies offer but only if its not an extra fee. Mine is a 2 year premium freeze and I'm not locked in for the whole time. I'm not sure about the claim part but I would say to consider the premium freeze feature if the price is right - you'll avoid shopping around for at least 2 years.


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## Mechanic (Oct 29, 2013)

I always look at my renewals and question any changes. I does pay to shop around every few years, as well as being careful that you don't over insure. As far as earthquake, I added that because the area I live does see more quakes and if one was to damage my foundation or structure, I would not want to be trying to fund that repair/rebuild. Always insure anything that would financially devastate, the loss of a 750k home would certainly fall into that category. There are also discounts if a mortgage is paid off, alarms etc. best to ask


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## Synergy (Mar 18, 2013)

Have the company tack on Guaranteed Replacement Cost (GRC) then you don't need to worry about the estimated rebuilding values. I wouldn't buy a policy without it, especially considering these limits are "estimates" at best. Don't forget about inflation, expect to pay an extra 2-5% each year to cover things like higher costs for building materials, wages, etc.


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## STech (Jun 7, 2016)

Mechanic said:


> As far as earthquake, I added that because the area I live does see more quakes...


Where abouts do you live? Are there charts or anything to show risks in certain areas?




Synergy said:


> Have the company tack on Guaranteed Replacement Cost (GRC) then you don't need to worry about the estimated rebuilding values. I wouldn't buy a policy without it, especially considering these limits are "estimates" at best. Don't forget about inflation, expect to pay an extra 2-5% each year to cover things like higher costs for building materials, wages, etc.



I agree. Now that I know what it is exactly, I'd definitely look for a policy that offers it. Even if their estimator is off, and I suffer catastrophic loss, they're obliged to rebuild. One quote I got, has the option of taking the money payout and not rebuilding. I suppose that could be a big selling feature to the mob


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## Spudd (Oct 11, 2011)

STech said:


> I agree. Now that I know what it is exactly, I'd definitely look for a policy that offers it. Even if their estimator is off, and I suffer catastrophic loss, they're obliged to rebuild. One quote I got, has the option of taking the money payout and not rebuilding. I suppose that could be a big selling feature to the mob


I think that's a big selling feature to anyone, to be honest. If your house burns down, you can sell the lot for land value and buy another house with the proceeds + the insurance money. And then you don't need to live in limbo for a year or however long it takes them to rebuild your house.


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## STech (Jun 7, 2016)

Spudd said:


> I think that's a big selling feature to anyone, to be honest. If your house burns down, you can sell the lot for land value and buy another house with the proceeds + the insurance money. And then you don't need to live in limbo for a year or however long it takes them to rebuild your house.



We really like where we live, and we'd more likely rebuild. Unless of course we discover there's something really bad in the area.

And I'm not really sure how much the payment will be. Say they're guaranteeing a rebuild cost of up to 700K, does that mean they'll give me the 700K in cash and I sell the lot as is, or will I only get 350K not to rebuild?


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## ian (Jun 18, 2016)

We just purchased home insurance after five years of renting. We found a huge difference between the quotes. One was almost twice the next. Once we settled on a carrier we upped our deductable to $2500. This saved a chunk. Realistically we are not going to put in a small claim. We buy insurance for the larger claims that would otherwise be financially challenging. Same for auto insurance. IF the premiums start to rise we will shop both policies again.


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## STech (Jun 7, 2016)

ian said:


> We just purchased home insurance after five years of renting. We found a huge difference between the quotes. One was almost twice the next. Once we settled on a carrier we upped our deductable to $2500. This saved a chunk. Realistically we are not going to put in a small claim. We buy insurance for the larger claims that would otherwise be financially challenging. Same for auto insurance. IF the premiums start to rise we will shop both policies again.



Speaking of deductibles. I'm the same as Ian, and feel comfortable with larger deductibles, as I'll never make a claim for small stuff.

I'm wondering what everyone else is setting their deductibles to? I'm thinking in the 3-5 thousand range is easily covered by me, but some times the risk-reward ratio doesn't add up.


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## Mukhang pera (Feb 26, 2016)

STech said:


> Speaking of deductibles. I'm the same as Ian, and feel comfortable with larger deductibles, as I'll never make a claim for small stuff.
> 
> I'm wondering what everyone else is setting their deductibles to? I'm thinking in the 3-5 thousand range is easily covered by me, but some times the risk-reward ratio doesn't add up.


We are at $10,000 deductible. That's the highest we have found that any insurer will let us go. I'd be very happy at $50,000 deductible with a concomitant premium reduction if I could. We would not likely make a claim for a whole lot less since, in the current climate, just about any claim will likely render one uninsurable forever after. As STech says, forget about claims for small stuff. I want insurance there in the event of a total or near total loss.



ian said:


> We buy insurance for the larger claims that would otherwise be financially challenging. Same for auto insurance.


True, same for auto insurance. Collision coverage is expensive. Perhaps worth having if you buy a new vehicle. Then maybe buy collision coverage for the first 3 years. After that, the vehicle is pretty much fully depreciated (certainly in the eyes of an insurer), so what's the point? Buy coverage for liability. Most can probably manage to self-insure a $50,000 vehicle, even if it smarts a bit, but not many will feel like or be able to cut a check for $2 million to pay out a personal injury claim.


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## off.by.10 (Mar 16, 2014)

STech said:


> I'm wondering what everyone else is setting their deductibles to? I'm thinking in the 3-5 thousand range is easily covered by me, but some times the risk-reward ratio doesn't add up.


I don't remember having the option of going that large. I think ours is 1k. From what I remember last time I was getting quotes, it's diminishing returns even at that point. Probably because it removes claims from small items theft / damage and leaves only the large problems (fire, flood, etc) which cost so much that the deductible does not change the payout amount significantly.


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## STech (Jun 7, 2016)

Mukhang pera said:


> We are at $10,000 deductible. That's the highest we have found that any insurer will let us go. I'd be very happy at $50,000 deductible with a concomitant premium reduction if I could. We would not likely make a claim for a whole lot less since, in the current climate, just about any claim will likely render one uninsurable forever after. As STech says, forget about claims for small stuff. I want insurance there in the event of a total or near total loss.
> 
> True, same for auto insurance. Collision coverage is expensive. Perhaps worth having if you buy a new vehicle. Then maybe buy collision coverage for the first 3 years. After that, the vehicle is pretty much fully depreciated (certainly in the eyes of an insurer), so what's the point? Buy coverage for liability. Most can probably manage to self-insure a $50,000 vehicle, even if it smarts a bit, but not many will feel like or be able to cut a check for $2 million to pay out a personal injury claim.



Yeah collision and comprehensive coverages on an older, average car is such a waste. By the time you pay the deductible and a good 10 years of higher premiums, you're more than likely have paid for the depreciated damaged car a couple of times over. The same people that can't figure out this math, are the ones who extended buy warranties and mortgage insurance.

The one nice thing about home insurance (so far), is than an additional 1M in liability is only an extra $20/year. Sounds good to me. 




off.by.10 said:


> I don't remember having the option of going that large. I think ours is 1k. From what I remember last time I was getting quotes, it's diminishing returns even at that point. Probably because it removes claims from small items theft / damage and leaves only the large problems (fire, flood, etc) which cost so much that the deductible does not change the payout amount significantly.



Most companies won't advertise the different levels of deductibles, and some of them you'll need to really push into allowing a higher deductible. Highest level I've found so far is $5,000. It's very clear, than the run of the mill deductible for the masses if $500.

The point of diminishing returns is what I alluded to earlier. If increasing the deductible from 2,000 to 5,000 only yields a $5 a year saving, then I'd opt for the 2K.


So I'm done shopping around, and I'm switching companies. Current company wanted $1,500 renewal. New company is $900/year, and get this, the coverage is better with the lower price. Clearly my loyalty was much appreciated .


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## Mortgage u/w (Feb 6, 2014)

STech said:


> ...So I'm done shopping around, and I'm switching companies. Current company wanted $1,500 renewal. New company is $900/year, and get this, the coverage is better with the lower price. Clearly my loyalty was much appreciated .


That's a substantial savings! Good for you! You just made $600 for about an hour's work!


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## STech (Jun 7, 2016)

Mortgage u/w said:


> That's a substantial savings! Good for you! You just made $600 for about an hour's work!



Yup definitely worthwhile, and the savings could be more once I decide if bringing the auto policy over is good or not. 


And I hope this continues, and it isn't just a teaser, first year new customer gimmick, because I'll definitely switch again.


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## Mechanic (Oct 29, 2013)

oops


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## Mechanic (Oct 29, 2013)

STech said:


> Where abouts do you live? Are there charts or anything to show risks in certain areas?
> 
> 
> 
> ...


Vancouver Island


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## STech (Jun 7, 2016)

Mechanic said:


> Vancouver Island


I ended up passing on the earth quake coverage. It didn't seem necessary, and the deductible was also $26,000. I hope I don't regret it, but from what I could find, it's a very rare coverage offered and bought in Ontario.


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## off.by.10 (Mar 16, 2014)

STech said:


> And I hope this continues, and it isn't just a teaser, first year new customer gimmick, because I'll definitely switch again.


If my experience is any indication, you'll see 10-15% yearly increase until you go shopping again in a few years. Seems to be how the insurance industry operates.


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## STech (Jun 7, 2016)

off.by.10 said:


> If my experience is any indication, you'll see 10-15% yearly increase until you go shopping again in a few years. Seems to be how the insurance industry operates.


My current insurer did exactly this. Except they pushed on 20-25% increases. As I said earlier, I was a little stuck with them as I had oil heating, and there's little competition for that. I hope this new insurer doesn't pull that stunt, but I'll absolutely drop them as soon as they do.

The one exception to this trend of get them, and screw them later, is Belairedirect for our auto. I don't mind giving them a plug, because they've been pretty good to deal with, and their rates have always been better for us. We've been with them for over 10 years now. Too bad they won't do the house, because it's above their threshold for value in a country property.


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