Auto, RV & Home Owner's Insurance - Bait & Switch

Two years ago, when we purchased our motor coach, did extensive search on insurance companies and their coverages.  One of the companies Allied Insurance (Part of Nationwide), through Farm & City Insurance Services of Forest City, IA, seemed to offer the best coverage at the best price.  Just received my bill for the next twelve months and was shocked to discover that my homeowner and auto insurance increased by 14%, and the motor home by 24%!!! (The previous year there was a minimal increase.) This increase amounts to almost $500.00 per year!  I have had no claims or traffic violations for several years.  When I called the agent, they could give me no explanation as to why the increase.  Now I have to start all over again trying to secure a more reasonable rate.  Anyone got any suggestions regarding a good insurance company that won't hammer you after two years?

1PlasticMan1 said:

Two years ago, when we purchased our motor coach, did extensive search on insurance companies and their coverages.  One of the companies Allied Insurance (Part of Nationwide), through Farm & City Insurance Services of Forest City, IA, seemed to offer the best coverage at the best price.  Just received my bill for the next twelve months and was shocked to discover that my homeowner and auto insurance increased by 14%, and the motor home by 24%!!! (The previous year there was a minimal increase.) This increase amounts to almost $500.00 per year!  I have had no claims or traffic violations for several years.  When I called the agent, they could give me no explanation as to why the increase.  Now I have to start all over again trying to secure a more reasonable rate.  Anyone got any suggestions regarding a good insurance company that won't hammer you after two years?

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Thanks for the heads up.  I am currently in my second year with Allied through FCIS. There was a fairly large premium increase at the last renewal but I found out the coverage was for much more total value than I wanted.  So I had the value of the coach adjusted downward to what I thought it should be and the premium dropped down significantly.  I am having the same problem on the house (not with Allied).  They all want to overinsure me for total replacement; however, total replacement of my home in its current location would cost almost twice what the average home in this neighborhood is selling for.  I would not replace it so I keep fighting every year to reduce the total loss coverage.

They all do it.  Homeowners, etc. They tease you in an attractive rate and within a couple years you're paying the same or more then a previous carrier. 

I had Allied with my last Phaeton MH. It was a 36' DP. When I inquired to them about insuring my new 40' Allegro Bus I learned that they would not be offering me a rate.  The reason I was given was that Allied was reducing their exposure to RV's over 37' long due to claims experience.  It sounded fishy, but I just hung up and shopped around. 

Now both of you guys are shorter than that, so that is  not the reason. It sounds like they are just limiting the number of  RV's that they want to insure.  I called The Hartford through AARP where I have had my auto's insured for several years. They gave me a rate about $100 less a year than I was paying for Allied.  I did bump it a bit though because I added "full timers" coverage since I will be in the next week. 

I checked around and other rates were as much as $1000 a year more. 

I have Allied on my small Class A. They went up in Texas a little too. But when I shop around I get higher rates on the motorhome from everyone else or companies that don't want the motorhome at all. I think the most competitive I got was Allstate.

Anyhow, they go up and down. Every time I leave Nationwide the one I left them for goes up and then I come back to them again. Remember your home and cars need to stay together or you lose home car discounts if you move. So I guess I am saying move it all at one time.

Bill N said:

Thanks for the heads up.  I am currently in my second year with Allied through FCIS. There was a fairly large premium increase at the last renewal but I found out the coverage was for much more total value than I wanted.  So I had the value of the coach adjusted downward to what I thought it should be and the premium dropped down significantly.  I am having the same problem on the house (not with Allied).  They all want to overinsure me for total replacement; however, total replacement of my home in its current location would cost almost twice what the average home in this neighborhood is selling for.  I would not replace it so I keep fighting every year to reduce the total loss coverage.

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Have you been successful getting your home owner's insurance covered value lowered?  I'm in the same situation and with USAA I can only get them to go down to 80% "replacement value" (which is nearly twice current market value).

There doesn't seem to be any solution except shopping around every 2-3 years. A really a good independent agent might watch the rates and do that for you at renewal time every year, but that's pretty rare these days. They write a policy at the best rate among the companies that they represent (not all companies) and then just let the renewals run. Not surprising, since much of their income is tied to the residuals from policy renewals.

Drifterrider said:

Have you been successful getting your home owner's insurance covered value lowered?  I'm in the same situation and with USAA I can only get them to go down to 80% "replacement value" (which is nearly twice current market value).

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Also with USAA for over 56 years and I have the same problem with them.  Why can I not insure my home and it's contents for what I deem it to be worth as long as it covers the balance on the mortgage?  Ask them that and you get a lot of gibberish in return.  They said once it is state law and I never bothered to chase that down but I have got it down to the 80 percent you mention.  Once again, at todays costs, it would cost almost twice as much to replace this house as the value of any other home in the neighborhood.  Bumfuzzled I am.

Bill N said:

Also with USAA for over 56 years and I have the same problem with them.  Why can I not insure my home and it's contents for what I deem it to be worth as long as it covers the balance on the mortgage?  Ask them that and you get a lot of gibberish in return.  They said once it is state law and I never bothered to chase that down but I have got it down to the 80 percent you mention.  Once again, at todays costs, it would cost almost twice as much to replace this house as the value of any other home in the neighborhood.  Bumfuzzled I am.

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The answer to your question is the valuation and settlement of Homeowners policies.  You are looking at this in an apples to oranges comparison, in that you are using existing values as your method of insurance valuation that can be construed as "Actual Cash Value", whereas your Homeowners policy provides coverage for Replacement Cost, the current cost of labor, building materials, fees and permits, etc to rebuild or renovate your house. In other words, you get brand new for old. These costs do increase with inflation over time, along with changes in the local building code that increase the cost of construction depending on where you live, such as energy efficient windows, increased insulation, increased number of smoke and carbon monoxide detectors, and possible retrofit of fire sprinklers.  Rebuilding/repairing a house is more labor intensive & specialized with a higher hourly wage than starting from scratch due to the expertise needed to blend old construction with new construction.  Insurance carriers don't get to bid out the rebuilding process like you and I get to do as their job is to get your home rebuilt as quickly as possible, since they are also likely paying out additional expenses for you to live elsewhere and want to end that expenditure as soon as possible.  The issue of using your home sales value is based on location, location, location, whereas the cost to rebuild in the same community under the same circumstances of access should be the same, whether in the wealthiest part of town or the least desirable area of town.  Lastly, the fact that many insured homes have a Replacement Cost provision that extends the policy coverage to 125-200% of the value shown on the policy, means the insurance companies want to insure homes at 100% to their estimated Replacement Cost.  Each state has its own regulations regarding the pricing, regulation, and management of insurance products.

Good answer in detail but you did not answer my basic question.  Why can't I determine what value I want to place on my home?  I would NOT rebuild it as, at my age, there are too many other options. So the rebuilding cost nonsense does not impress me.  I will be searching for other insurance options.  As an aside this house was only 5 years old when I bought it and while I recognize there have been price increases it is simply the problem of who determines how much I can insure it for that bugs me.  One thing that insurance reps never relate in their rebuilding costs spiel.  The land is still there and it represents a good sum of the value. The fences and outbuildings are also still in place - all utilities are on the property.  Sorry, but to me it is a big scam.  With any insurance I am betting that I will lose. Thanks for your thoughtful and detailed answer.  It was appreciated.

I can insure my car for actual cash value or "stated value".  My homeowner's won't allow "stated value" because they can get away with it.  You would think they would love to insure a lower dollar risk but they don't.  I asked USAA about earthquake insurance on my residence.  They don't offer it. Their rationale was "you aren't in an earthquake zone" (I actually am).  Wouldn't it stand to reason they would make money offering a policy that is unlikely to ever pay off?  Two days after the call an earthquake in Richmond, Va. was felt where I live in MD

I defy any person to show me any legislation from any state that prohibits insurance company from insuring real property for "stated value".  I don't believe any such legislation exist.  I think it is more a care of they can get away with it and so they do.  It is very much like most bank are not interested in offering a mortgage on a property valued below $50,000.  Some are but you really have to look.

The premium for our Progressive motorhome policy has gone down slightly two of the past four years, not counting a one time increase when we upgraded to a newer coach. The increases the other two years have been small also, in 1-2 pct. range.

Bill N said:

Good answer in detail but you did not answer my basic question.  Why can't I determine what value I want to place on my home?  I would NOT rebuild it as, at my age, there are too many other options. So the rebuilding cost nonsense does not impress me.  I will be searching for other insurance options. 

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The short answer to your question is that you have the wrong product for what you want and it really doesn't exist in the regular insurance marketplace anymore.  The HO-3 Homeowners policy is what you have and it automatically provides for "Replacement Cost" in its policy provisions and insurance companies will not insure homes for less than replacement cost (the use of Marshall Swift estimating systems determine the estimate). You want an HO-1 or HO-2 or HO-8 product that provides Actual Cash Value to your home.  These products are hard to find because they are only used by "specialty" carriers for writing distressed business at higher costs, so your desire for cost efficiency will be defeated.  Not only is the coverage based on "Actual Cash Value", but the coverage perils are more limiting....you only get coverage for the perils of Fire, Lightning, Windstorm & Hail, & Vandalism at most. Nothing more. 

Replacement cost valuation for a homeowner policy is the best game in the world for the carrier. A fraction of a percent of losses nationwide for carriers result in a limits case where they total the home. Meaning 99%+ percent of all their claims are well under the insurance limit. Remember in homeowner cases they total the house but don't take deed of the property so the owner still owns the dirt/building lot. Many lots are worth big money in good areas. In a large liquidated demand fire homeowners tend to profit. But is so infrequent.

So the whole time they get to charge 100% of their book of business a premium on a higher value for the home replacement that they will probably never pay out.

Wind and hail make for about half of the claims on houses. Unless its tornado they almost never total the house. Usually roof and some siding and fascia issues. The next most frequent claim is domestic water leaks. Bathroom floods, refrigerator ice maker fails etc. Not even close to a total loss. Then there is theft bringing up the rear with a few thousand bucks.

Generally speaking if you are hit with a tornado or you burn it severely you will never get paid policy limits on the house. Most insurance carriers "Replacement Cost" coverage requires you insured the property to 80% of its replacement cost. Theoretically you can respond by saying you want it valued at 80% of their number. If its a renewal they may have a problem because they cannot non-renew you in underwriting with company standard conduct when the unilateral policy they write gives you that option. So if the renewal number is way higher on limits tell them to insure you at 80% of that number. See what happens. It will reduce premium and a lot will come off of your wind and hail deductible.

satxron said:

Replacement cost valuation for a homeowner policy is the best game in the world for the carrier. A fraction of a percent of losses nationwide for carriers result in a limits case where they total the home. Meaning 99%+ percent of all their claims are well under the insurance limit. Remember in homeowner cases they total the house but don't take deed of the property so the owner still owns the dirt/building lot. Many lots are worth big money in good areas. In a large liquidated demand fire homeowners tend to profit. But is so infrequent.

So the whole time they get to charge 100% of their book of business a premium on a higher value for the home replacement that they will probably never pay out.

Wind and hail make for about half of the claims on houses. Unless its tornado they almost never total the house. Usually roof and some siding and fascia issues. The next most frequent claim is domestic water leaks. Bathroom floods, refrigerator ice maker fails etc. Not even close to a total loss. Then there is theft bringing up the rear with a few thousand bucks.

Generally speaking if you are hit with a tornado or you burn it severely you will never get paid policy limits on the house. Most insurance carriers "Replacement Cost" coverage requires you insured the property to 80% of its replacement cost. Theoretically you can respond by saying you want it valued at 80% of their number. If its a renewal they may have a problem because they cannot non-renew you in underwriting with company standard conduct when the unilateral policy they write gives you that option. So if the renewal number is way higher on limits tell them to insure you at 80% of that number. See what happens. It will reduce premium and a lot will come off of your wind and hail deductible.

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What you don't think in your attempted rationale is that Homeowner policies also include liability coverage and the legal expenses are not included in the limits of coverage, therefore lawsuits get very expensive. Different areas of the country have different sets of issues, but generally water damage claims amount to about 2/3 of all claims filed and weather/wind are next on the list. In California, 100% insured to value is the requirement to writing insurance and almost all policies have 125-200% extended replacement cost coverage endorsements attached, but the 80% rule applies to whether the insured is penalized in the event of a claim. Theft of property, fire/smoke damage, and animal liability (usually dog bite) claims are also in the top group of claims paid.  Dog bite claims are very expensive as the average cost of one of these claims is over $30,000.  Where the insurance companies used to make money is the interest income accrued in holding premium dollars, but as interest rates have hit rock bottom and money must be kept in accounts where liquidity is important, they have become more concerned with underwriting profits as the amount of interest income only amounts to about 2% of their bottom line, where it used to be considerably more.  Life insurance companies get to put their money on long term real estate holdings and the actuarial tables they use have already set the length of life probabilities.
Insurance is a complicated, but necessary product due to its intangible nature

Nationally its Wind, non weather related water, weather related water, hail, and theft as the top 5 types of claims. Type in the zip and the top 5 will be listed for your area on this link. My top in Texas is wind. https://www.allstate.com/anon/commoncostlyclaims/#

http://www.insurancejournal.com/news/national/2016/04/06/404400.htm

Your are correct, legal expense is not considered in liability limits of coverage it is paid as a claims expense by the carrier.  100% insured to value is a very grey area. Do a valuation with MSB, Xactimate, or Simbility? Do a valuation with a rule of thumb? You will get 4 answers than ask a contractor square foot cost you will get another answer. Set the valuation with everything rated at above average or average? That is why they have the 80% rule in California loss settlement agreements on Replacement cost.  Too many variables. He can tell them they over valued his home. If they are building new homes down the street like mine and selling them at 300k which includes the real estate its on, if they value my house for the dwelling at 400k something is very wrong.

They make their money at valuation time and they are not really worried about total loss dwellings as that is so very little of the loss exposure. People who have 1% or more deductibles absorb a ton of the losses if the valuations are artificially high. Example a 10k loss at 1% with a 300k house is 3000 bucks, 4000 bucks for a deductible on a 400k valuation.

As a customer you surely can challenge the valuation before you buy or renew.

Thank you all for your input.  Disappointed that it had more about home owner's than RV coverage.  Anyone got more input on RV and Auto Insurance providers?  I bundle with home owners to get best price.  Thanks.

I am sorry for the distraction but our earlier responses were and are you need to keep it together with your house and cars. I would shop your house and car bundle for a lower rate. If the company that is lower won't take the motorhome then see what it cost to ensure elsewhere, add it all together and see if you have a savings.

The frustration is having to do it all every few years. There doesn't seem to be any way around that one. The focus on house and car bundle is simply the savings on it. If they have good rates on those items you can afford a little hit on the motorhome.

I agree.  Am looking at all angles - car/RV; car/home; car/RV/home; etc.