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A few insurance related construrction questions

1398 Views 6 Replies 4 Participants Last post by  dmohrman

I am a Michigan insurance agent. Part of the insuring process for homes as you may know is figuring out what the reconstruction cost of the house would be in the event of a total loss. Recently, with declining home values the issue of replacement costs and how they are determined is being scrutinized much more closely than what it once was. The reason being, insurance companies do not want to insure a home whose value is significantly lower than the replacement value, on a replacement basis. Most require the market value to be anywhere fomr 70-80% of the replacement value.

This has raised alot of question about how our reconstruction costs are calculated. Not being builders and contractors, alot of what we know about homes has been passed along through training over the years and now some of us are wondering if we could maybe be more accurate in what we do. For example, we may have a 75 yr old lady call to get insurance and yeah, she may know how many rooms there are or how many bathrooms or even how many square feet the house is but then you get to questions like do you have a poured concrete or block foundation, many do not know. In these events we are some what forced to make an estimate. Come to find out most agents have different beliefs about what certain standards are in construction. So this raises some questions about standards of construction that i am hoping to get some input on, like:

1) Poured concrete foundations vs block foundations. My understanding is that newer homes use poured where older used block. Is this correct and if so, around when did it become common practice to use poured walls vs block?

2) Shingles, we have always assumed that these are Composition or Asphalt shingles. Some agents believe most newer homes or houses that are re-roofed these days use Architectual Shingles? Is this correct and if so, when did this start to become common practice?

Thats is it for now, if i come across more Ill post them.

Thanks in advance for your time and answers!
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My house is from the 50's & has poured concrete walls
Neighbors house built around the same time - rock walls
Might be a cost issue & may depend upon the location/area

Roofing is a customer choice
Architectural looks better IMO so that is what I use
Again it can come down to cost - they are more expensive
Bigger/newer/more expensive homes seem to always have them

My house is being roofed in architectural shingles
In addition ice & water shield has increased
That will add to the cost of a roof
Scuba...your not doing all this yourself?

To OP.. Foundations are not standard. More of a choice of the GC building the home. Most will use concrete because of speed to continue in the building process. I use a lot of block because I do not own foundation wall forms and have many masons on staff. Shingles are also depending on area and neighborhood. In high end areas I deal with we use a lot of slate or cedar shake shingles. In lower end cities we use regular asphalt ones and in better homes (not the expensive ones) we use architectural shingles. But in the SW you will see more tiles because the hot climit will limit the shingles live. In the north you will find steel roofs to better shed snow due to overstressed loads. Best is to know your area and deal with that. Materials vary in quality and costs. But a home is usually grouped with materials of like values. like track homes may be painted with Behr paint where as homes here in CT we use C2 or Benjiman Moore paints. Track homes will have pine trim, here we use Azek.
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There are many options for foundations today that were not available 20 years ago.
Some of them are. precast wall sections (Superior Walls is one brand name), Insulated Concrete Froms (ICF), block, standard poured. They even made wooden foundation at one time from pressure treated wood.
Scuba...your not doing all this yourself?
Building & roofing 24x36 garage/addition above/walk up attic - Yes
Foundation & Garage floor - no way - I leave concrete work to the Pro's

Insulated panels on foundation also increase cost
New TP, weather resistant outlets increase costs
AFCI breakers now increase cost

A house like mine built in the 50's that has not been updated will cost more to rebuild & bring up to current codes. A house with outdated electric, old windows, old heating system etc may be worth a lot LESS these days then what the cost to rebuild is

A house I know sold for $200k recentkly sold for $132K
A small house on our street was $299k+ is now on the market for $239k & isn't selling
But the cost to rebuild is still not going down, it is going up. Our taxes are higher and material costs go up every three months. Land value and profits are going down. but for insurance neither matter.
But the cost to rebuild is still not going down, it is going up. Our taxes are higher and material costs go up every three months. Land value and profits are going down. but for insurance neither matter.
More people need to realize this. Most consumers are under the impression that since the building boom has slowed that building prices are going down and that is just not the case. We have customers who constantly argue over the replacement amount we come up with and have trouble getting them to understand that.

I appreciate everyones input.
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