Valuation is where a good agents and companies separate themselves from just a pure short term sales philosophy.
Most Homeowners are not aware of rebuilding costs of their homes because they focus on other things in life. During soft markets, many will lower the valuations to gain a price advantage on entities who properly value properties.
Companies that undervalue properties have a high probability of underestimating their PML which could prove fatal in a large event.
How can APCIA conduct a survey about the failure of homeowners to maintain the right amount of insurance on their homes and never mention the availability of “Guaranteed Replacement Cost” coverage. These endorsements, available in most states, require homeowners to maintain limits consistent with the “replacement cost” (the pre-loss cost to build a similar home) and pay a nominal additional premium. In return, insurers agree to increase the amount of insurance following a loss occurs to whatever is needed to repair or rebuild the home.
That’s the coverage consumers need and that’s the coverage insurers should be offering. Instead, the industry promotes increasing limits on existing policies which in most cases require homeowners to pay more premium (30-50% more) for less (fixed limit) coverage. Homeowners are required to purchase limits based on inflated post-loss “reconstruction” cost valuations; pay premiums for coverage the policy actually provides for free (debris removal) and pay for costs the policy doesn’t even cover (code upgrades) or is provided as a free additional coverage.
It seems to me, if consumers did that, they wouldn’t need to guess on how much coverage they would need to respond to small losses, large losses or potential catastrophic losses like hurricanes, tornados or even wildfires. Insurers would assume the risk of potential price surges, increased building costs, etc. Most homeowners are ill-prepared to determine what amount of insurance they need to respond to any and all future events. Insurers have (or should have) the resources, experience and expertise to do that. But I would certainly listen to other points of view.
Valuation is where a good agents and companies separate themselves from just a pure short term sales philosophy.
Most Homeowners are not aware of rebuilding costs of their homes because they focus on other things in life. During soft markets, many will lower the valuations to gain a price advantage on entities who properly value properties.
Companies that undervalue properties have a high probability of underestimating their PML which could prove fatal in a large event.
How can APCIA conduct a survey about the failure of homeowners to maintain the right amount of insurance on their homes and never mention the availability of “Guaranteed Replacement Cost” coverage. These endorsements, available in most states, require homeowners to maintain limits consistent with the “replacement cost” (the pre-loss cost to build a similar home) and pay a nominal additional premium. In return, insurers agree to increase the amount of insurance following a loss occurs to whatever is needed to repair or rebuild the home.
That’s the coverage consumers need and that’s the coverage insurers should be offering. Instead, the industry promotes increasing limits on existing policies which in most cases require homeowners to pay more premium (30-50% more) for less (fixed limit) coverage. Homeowners are required to purchase limits based on inflated post-loss “reconstruction” cost valuations; pay premiums for coverage the policy actually provides for free (debris removal) and pay for costs the policy doesn’t even cover (code upgrades) or is provided as a free additional coverage.
It seems to me, if consumers did that, they wouldn’t need to guess on how much coverage they would need to respond to small losses, large losses or potential catastrophic losses like hurricanes, tornados or even wildfires. Insurers would assume the risk of potential price surges, increased building costs, etc. Most homeowners are ill-prepared to determine what amount of insurance they need to respond to any and all future events. Insurers have (or should have) the resources, experience and expertise to do that. But I would certainly listen to other points of view.