My insurance company increase my coverage that lead to higher premium

[cw30000]

What is the name of your state (only U.S. law)? NJ

I just purchased a home for $620k and for the home insurance, the coverage is $500k base on the total livable space. Shortly after I moved in, they sent an inspector to inspects the exterior of the house and the result was that they determined that I need more coverage.

The bill is in today, and they changed my coverage to $767k, without I am agreeing to it. The premium goes up by 25%. I am shock.

I called them up, but they said they have to review the inspection report before they can give me a decision where I must take it or it is optional, but the rep told me if I don't, my policy become nonrenewable.

I felt like I just become a victim of bait and switch scheme where they give you a low price to get you signed and then switch you to a higher price.

 

[Banned_Princess]

What is the name of your state (only U.S. law)? NJ

I just purchased a home for $620k and for the home insurance, the coverage is $500k base on the total livable space. Shortly after I moved in, they sent an inspector to inspects the exterior of the house and the result was that they determined that I need more coverage.

The bill is in today, and they changed my coverage to $767k, without I am agreeing to it. The premium goes up by 25%. I am shock.

I called them up, but they said they have to review the inspection report before they can give me a decision where I must take it or it is optional, but the rep told me if I don't, my policy become nonrenewable.

I felt like I just become a victim of bait and switch scheme where they give you a low price to get you signed and then switch you to a higher price.

this is common.

when the policy was being written, they were using sq ft, as well as basic information about the building materials used to construct the house to determine its cost to rebuild. (has nothing to do with the cost to buy the house)

then the inspector got out, and as usual the initial estimate was too low.

they don't need your approval to increase the dwelling a coverage, which increases all the rest of the coverages (except liability) in turn increasing the premium.

you are free to get another insurance policy as soon as possible, but you will probably find you will get the same procedure. when getting new quotes, ask if there will be an inspection.

until then, some things you can do to lower your current policy would be, drop the full replacement coverage, increase your deductible, lower your liability, and drop any extras like sub pump backup or whatever and PRAY nothing happens between then and when you replace the coverage.

use an insurance agency, they deal with multiple companies and would know which one wont do inspections.

you might want to take into consideration, that the cost to rebuild your place might actually be that high, and you do want to be adequately and fully covered against any loss, so i suggest you also inquire about flood insurance with FEMA. (agents can check that out for you too. )

You never know, and HO insurance covers absolutely no flooding situation.

 

[Country Living]

You're confusing market value with replacement value. Market value is what you paid for the house. Replacement value is the cost to rebuild the house in case of a total loss and is the number used to insure the house.

 

[moburkes]

Per a conversation I had with a former NJ underwriter less than an hour ago (literally - what a coincidence), they have 6 months to increase your dwelling coverage in the state of NJ. It's not optional. If you had a total loss and didn't have enough coverage under your policy, you'd be suing them for negligence. Now that they're making sure you have enough coverage, you're complaining.


You can cancel and choose another carrier.

 

[Country Living]

I find it interesting that most people focus solely on getting the lowest premium until they've had a loss. Then they want the insurance company to make them whole.

 

[cw30000]

Per a conversation I had with a former NJ underwriter less than an hour ago (literally - what a coincidence), they have 6 months to increase your dwelling coverage in the state of NJ. It's not optional. If you had a total loss and didn't have enough coverage under your policy, you'd be suing them for negligence. Now that they're making sure you have enough coverage, you're complaining.


You can cancel and choose another carrier.

I have spoke with a rep and gave her a more accurate description to her and she come out an estimate of ~620k, in line with my purchase price. She will review the inspection report and get an update with the inspector how he came up with the required coverage.

Btw, how does home insurance claim works anyway? Is it like a car insurance claim where they come and give you a check and you decide what to do with it?

 

[JustAPal00]

I have spoke with a rep and gave her a more accurate description to her and she come out an estimate of ~620k, in line with my purchase price. She will review the inspection report and get an update with the inspector how he came up with the required coverage.

Btw, how does home insurance claim works anyway? Is it like a car insurance claim where they come and give you a check and you decide what to do with it?

What you paid for the home has nothing to do with what the rebuild cost is unless the home is new. You insure the home for what it costs to rebuild it not what it would sell for!

 

[racer72]

I have spoke with a rep and gave her a more accurate description to her and she come out an estimate of ~620k, in line with my purchase price. She will review the inspection report and get an update with the inspector how he came up with the required coverage.

Btw, how does home insurance claim works anyway? Is it like a car insurance claim where they come and give you a check and you decide what to do with it?

Not even close. Your mortgage company's name will be on the check too and they will insist that the house be repaired or replaced. That is why you need enough coverage to replace the house if it a total loss. Now consider, can you replace the house at it's current value and all the contents of the house with the policy you have? In most cases like this, folks find they are underinsured.

 

[moburkes]

I have spoke with a rep and gave her a more accurate description to her and she come out an estimate of ~620k, in line with my purchase price. She will review the inspection report and get an update with the inspector how he came up with the required coverage.

Btw, how does home insurance claim works anyway? Is it like a car insurance claim where they come and give you a check and you decide what to do with it?

In my experience, in less than 10% of the time, the # does get adjusted down. Usually the adjustment is less than $10, but I've seen cases in which the adjustment was $40k or $50k.

Good luck!

 

[cw30000]

What you paid for the home has nothing to do with what the rebuild cost is unless the home is new. You insure the home for what it costs to rebuild it not what it would sell for!

The home is pretty new. It was started rebuilding it in 2006 or something. It teared down the original home and rebuild and expanded. This is the reason why I questioned it.