Underinsured Homes in Wealthy Areas

marindependent

Guru
1000 Post Club
Hello All: In the past two years I have become increasingly worried about how often I stumbled upon homeowners who are extremely under insured with their current home insurance policies. Most of these policies are in the San Francisco Bay area where homes are much more expensive to build and rebuild.

What I cannot understand is how "some" insurance agents sign off on these rebuild valuations. I realize that many insurers themselves are partially to blame, but I do not understand how a local agent has not learned from past California lessons. This is a concern for your community and to some extent it could be an errors and omissions issue.

Yes I realize that having others do such a poor job, is good for my professional business, however I believe that to be a selfish view.

My question to the group is - How Best to Bring up the Subject with other Agents without alienating them or making them feel like a think poorly of them.
 
This doesn't sound right...

From what I understand, Bay area homes sell for well above what it would cost to replace them, much of California is this way.

Now where I am, many of the older homes are the exact opposite. RC can be twice as much as market value if not more. So many homes can be underinsured here if the agent is only writing to market value. Of course many companies also try and catch this with inspections and their own calculation of RC.

As to how to solve it, I'm not going to tilt at windmills, but I definitely will educate every insured I come across and refuse to write those that won't properly insure their home. Also, make sure to include extended replacement cost if offered by the company. This helps protect against mistakes in the RC and suddenly rising construction costs.
 
Crazy is right. I can't even imagine. Where I live you can get a nice house with land for $230k.

Definitely. That will get you either a nice home on a large plot or an older home in a nice neighborhood in the heart of the city here.

The homes just under $750k were 2000 sq ft at best, which is around what $230k would get you here.
 
We are a very large country. What is normal in some back water hollor or a suburban area in the South may not be the same in Montana or Colorado or California.

Oh, I get that completely. Of course, the trailer itself is probably worth 50k or so, it is the lot that is worth a lot.
 
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