Hi. I purchased a Citizens Property Insurance home policy, with wind damage, 15 years ago. The agent took basic info regarding my home (nothing beyond address, sq ft., year built). I accepted the quote and as the years rolled by the premium climbed as they do in south Florida. When it reached $6,000 this year for my modest home I did some research. An article regarding cost replacement estimator software used by the insurance industry caught my eye. The cost to rebuild my home seemed high but who am I to question construction costs as a layperson. I contacted my agent who gave me the detailed breakout for my home done by the software Value360. Shockingly the long list of my home's details were significantly wrong. It detailed the following non-existent rooms: a 10x10 laundry room, 8x10 walk-in closet, 4x6 nook, a foyer, and a 4x6 pantry. In addition it listed 14 windows (vs 7 actual), 2 full baths (vs 2 3/4 baths), an attached outdoor 525 sq ft 100% covered (i.e. roofed) and 25% wall enclosed paver patio area (vs actual 525 sq ft open paver area in my back yard). All these mistakes had been driving my replacement cost, and premium, above what they should have been. I am currently in the process of correcting these mistakes with my agent who with the correct details has generated a CRE of $290,000 vs the policy listed $351,000. We are waiting for the insurance company to generate a new policy premium quote. The question is this...do I have any rights to request that the insurance company, not the agent, reimburse me for premium over-payments? I am not naive enough to expect them to go back 15 years but is it unreasonable to request some form of goodwill refund? I have never filed a claim in those 15 years. Thanks for any help and feedback.
Cost replacement estimator error
- Thread starter Paddy
- Start date
- 2,296
I doubt that you will receive any refund or credit. How often have you read your policy vs looking at the premium and paying it? How many times did you question the agent in the past when you thought that the premium was high or the replacement cost was high? Was the policy written when you purchased the home and/or was it written by the lender?
You can write to the Florida Bureau of Insurance with a complaint and you might get some action but time is not on your side past the previous year.
You can write to the Florida Bureau of Insurance with a complaint and you might get some action but time is not on your side past the previous year.
- Thread starter
- #3
I go through it every year line by line. When asking about premium increases the reply is that Citizens applied for and received increases through the Florida Insurance Commission (these are broke out on the cover page). Annual increases in home replacement cost have been explained away as adjusting for inflation cost in labor and materials (i.e. 2-3% /yr). When I purchased the home I sought out the policy quote which at the time Citizens was the only insurer willing to write a policy given the unique nature of our hurricane risk in south Florida and the choices have not improved since. Upon speaking to 4-5 neighbors none, as consumers, were made aware by their agents that this type of software is widely used and that often times the software is set to default perimeters beyond the basic info input by the agent (i.e. Value360 default at least for my area is set to 14 windows). Again, as consumers, I would wager that few of us are aware that even the minutia of our home construction is detailed in this software (i.e. crown or chair molding, tile, rug, fixtures, etc.) There is, of course, no effort to educate consumers that this type of software is almost ubiquitous in the industry. If I had any idea of the pervasiveness of it's use I would, of course, had asked to sit down and go through the software input for my home's construction details/quality line by line. This may end up being nothing more than an exercise in venting my frustration but I do appreciate all replies. There really should be some sort of a state level mandate that agents and or the insurance companies explicitly make consumers aware of the CRE process and at least give them the option to be involved. Or, as I already receive a 20 page policy every year, just include the extra 4-5 page CRE break-out.
- 2,296
Have you asked what the premium difference is between the 290K and the 350K? I would be surprised if it is a large amount. I have seen companies switch replacement cost estimate software a few times and the difference in generated premium is not that large. You get the home rebuilt as per the cost of the rebuild, not the amount of excess coverage. If it costs 275K to rebuild that is what is paid even if the home is insured for 500K
- Thread starter
- #5
The agent is unable to give the premium difference as that will come from the insurance company when it accepts the new CRE. It is plainly understood the rebuild cost is what it is regardless of excess coverage but the premium, to some degree, is driven by the amount (i.e. rebuild coverage) the company may have to pay out in a worst case scenario. And no, just because the CRE drops 17% to $290,000 I am not naive enough to think there will be a correlating 17% drop in the premium. It may offer an opportunity with today's social media to start a grass roots campaign, at least here in Florida, to push legislation that the use of this software and it's impact on premiums is made clear to consumers not just at an initial policy quote but yearly as well.
- 2,296
My understanding of Florida Insurance is that most of coastal coverage is carried by the state with major carriers as the back-up insurer ever since Hurricane Andrew nearly wiped out the insurance companies. I don't understand how or why an agent can't give you a premium quote on a new policy or endorsement to change the existing policy. Shop other carrier options if this is the excuse given but it could be because of the state coverage portion
- 2,765
Sure, you have the "right" to "request" but that's no guarantee that you will get anything back.
Except for the Coverage A on your dwelling.
Anyway, if you want to double check the insurance company valuation, here's a good online building cost estimator. It's comprehensive and you get to put in all your own details.
House Cost Estimator | Cost to Build a Home
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Citizens IS the Florida Insurance plan. Your policy should have information about time constraints for complaints about billing and I doubt that you will get any relief. The carriers i have written for usually set any refund to the last renewal unless I could prove that there was no insurable interest beyond that time frame. You are insured by the state insurance plan and you still own and occupy the home. You must be in a high hurricane alley if there are not any other options.
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My personal opinion is that the $350,000 vs $290,000 is not all that much for a potential "over-insurance" situation These cost estimator programs are really just guestimates.
In addition there are many features of the home that these estimators do not take into account.
I agree that likley its not that much of a premium differential.
I would investigate with your state regulator if any laws exist about Home Rebuild Modeling, currently. There are some rules about their use here in California.
Lastly there is ample evidence that some/many homes are actually underinsured. "Nationwide, more than two-thirds of homeowners are underinsured..." Consider reading this article from an Insurer Non Profit.
In addition there are many features of the home that these estimators do not take into account.
I agree that likley its not that much of a premium differential.
I would investigate with your state regulator if any laws exist about Home Rebuild Modeling, currently. There are some rules about their use here in California.
Lastly there is ample evidence that some/many homes are actually underinsured. "Nationwide, more than two-thirds of homeowners are underinsured..." Consider reading this article from an Insurer Non Profit.
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I forgot to ask how close the listed square footage is to your actual square footage, not your estimate. If the square footage is correct it really doesnt matter about the book or interior rooms as much as you obviously think. Your carrier is going to insure the building for what it believes the cost will be based on the likelihood that you will have a total loss and the frequency of that likelihood
