Do You Adjust Your Home Insurance Structure Cost?

For the first few years after we moved into our house in 2007, the value of the home declined on pretty much every level.  Comparable houses went for less.  Average square foot went less.  Zillow told us it was worth less.  Even our property tax assessments told us it was worth less every year.  We didn’t trick ourselves into thinking it was worth more.  We knew darn well, just like everybody else, that it was worth less.

Well, almost everybody.

Allstate apparently has not gotten on board with the lower value theory.

Our homeowners policy is probably just like every other one in that it defines the maximum replacement cost if the structure had to be rebuilt.  This makes sense, but what doesn’t is that it has risen each and every single year, and not by a small amount.

This year, the maximum value of the house plus other structures (garage, deck, what is this, I’ll have to ask) is totaled over $120,000 higher than the value that I would expect we could sell the house for.

And that selling price includes the lot as well.

Our house is nice but it’s nothing fancy.  I know darn well that Allstate wouldn’t put granite counter tops in the event that the house or kitchen needed to be re-built.  They would pay for the same Formica counters we have now.  Sure, they’d ‘allow’ us to pay the difference, but my point is, I see no way where re-building our house would cost anywhere near the maximum value that they are reporting.

The two variables I wonder about are demolition and landscaping.  Assuming the worst, that our house suffered a catastrophic fire, I’m assuming that part of the cost would be the removal of what would be left standing to the point that they could start from scratch.  I would also assume that since the current house has grass, bushes, and such, that these would be replaced since they’d be lost during either the hypothetical fire or the demolition process.

Even with these two factors, plus maybe other stuff (re-connecting all the utilities), I can’t see any scenario where re-building our home would approach the maximum value that we’re insured up to.

So, I ask, dear readers:

  • Have you ever had your insurance provider adjust the maximum value of the house?
  • What type of savings have you achieved if so?
  • Are there other costs that I’m forgetting?
  • Am I missing something glaringly obvious?
  • What other questions or scenarios should I ask my agent when I give a call to discuss this?

We do have content coverage, which I’m fine with, and we have guest medical costs and all that, I’m strictly looking at the line items that refer to a potential structure replacement.

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