HO Policy Dwelling Coverage Question
 

How does one determine the "right" amount of dwelling coverage needed, as part of an HO policy? I have quotes for HO policies that vary in the dwelling coverage significantly. I can not get a good explanation why one agent's determination of dwelling coverage is almost 25% less than anothers.

In theory, an insurance agent should measure the home and apply some factors supplied by the insurance company to determine replacement cost (not market value). You will need to ask each how they arrived at their figures. With your feedback on the interior features (eg., granite countertops? Other upgrades?) they should be able to arrive at a figure that comes close to what it would cost to rebuild your home if it were destroyed.

In most cases, it is not a good idea to question the recommended coverage amount applied for a replacement cost policy. If you do, you may not get full replacement cost when you file a claim.

QUESTIONING them is not a problem, you should always question things you don't quite understand or agree with. It's CHANGING THEM below what the insurance company requires that is the problem. The cost difference is tiny.

Under air square footage, frame or block, hip or gable, flooring type, upgrades to kitchen, bathrooms, attached structures such as open porch, lanai under roof. These are some of the factors used to determine cost to rebuild. Land value is not part of coverage. Also, make sure you have replacement cost to dwelling coverage.

Swimming pools, spas, bird cages, etc also increase cost to rebuild.

So again, I ask:

Two quotes allow replacement dwelling coverage of 345K, while 2 others allow only 300K. How does one make an educated choice of coverage?

Call Debbie Thomas of State Farm insurance at Nathan Thomas insurance on 301 Phone number is 352-748-5272.
She is top shelf in her field for many years and was a State Farm underwriter.
You can get great savings when getting all your insurance needs from them and She lives in the villages and is versed in the homes in the villages. She will help you balance cost vs. risk vs. coverage.
Good luck

If you have for example 345K dwelling coverage, is that not the max you can receive (regardless of the cost of replacement)?

That is why I ask, how do you assure that your dwelling coverage is adequate, especially when you receive quotes for varying amounts of coverage?

Replacement cost coverage will pay to replace damaged items with new, but only up to the total policy limit. You want the policy limit to be at least as high as the market value of your house, less the land value. So, if your house is totally destroyed, you may not be able to rebuild it, but you will receive the market value, so you can buy another house of equal value. Most houses cannot be rebuilt for their current market value, and it is probably not worth the extra cost to insure the house for that amount. Unless, you are absolutely in love with the lot and would want to rebuild a new house on that lot.

I don't agree in what you are saying in total. OP needs to speak with state farm Debbie and she will explain what replacement cost is and up to what value it covers. some policy will accommodate the increase. just FYI