RC is Marshall & Swift Always High

[indienoise]

I found this thread because I'm kind of on the other side of this problem.
I have an MSB estimate which is probably pretty accurate, but I'm still looking at a lower value home. Sub $125k, which I can't get a rate from the usual suspects if cov a is under that. I know that's usually the threshold that a home is often insured with an ho8 or some other non standard home policy.

I come from a captive background, where we could pretty much write anything so the appetites of these carriers are kind of new to me.

If I bump up the coverage on the house a little to get to the value they start looking for, is that going to be a problem for the underwriter/carrier? 125 is about 8k north of the MSB. Am I looking for trouble doing this, or is this fairly common?

I apologize if I seem to be obsessing over nothing, but I want to get this right without any hiccups, this is the first referral to my new agency from a mortgage broker and I want to make sure this leads to more and more referral business.

 

[insurance1822]

Hi Indienoise, welcome to the insurance business...

1.) It's not unusual to have to raise the dwelling coverage to meet the loan amount, this is normal. In my market some of the newly built homes located in well to do areas can have loan amounts 50-100k over the RCE. To avoid any drama w/ the carriers, I just inflate the square footage.

2.) You're technically (accordingly to some scum bag carriers..) supposed to take the square footage of built-in garages (garages w/ living space above them..) and add the square footage of the garage into the sq foot of the house. I.E. a 2k sq ft home that has a 2 car built-in garage should be listed as 2ks sq ft w/ a (2) car built in garage..then lets assume each garage bay is 275sq ft...so add another 550 sq ft. So final calculation would be 2550 sq ft w/ a (2) car built in garage.

3.) Are you paying attention to STANDARD vs VINTAGE construction? Vintange construction will calculate off the building methods of pre 1940 homes (i.e. wider doors, solid 10" base molding, solid oak hardwood floors, plaster, wider stairways etc.) This will generate a MUCH higher RCE. In fact (if the carrier allows it...) I usually use the standard method to getting more realistic RCE's. Certain carriers don't allow functional replacement cost & demand the RCE to be calculated over vintage construction. Those will have sometimes 2x the dwelling coverage.

4.) Pay close attention to basement vs slab vs crawlspace

5.) Make sure it's not a masonry building that's since been covered w/ siding

6.) Exterior special features such as sliding doors, bay windows, decks, porches etc sometimes (usually) need to be added in

7.) Certain carriers will flag a policy if the dwelling coverage is >120% of what their RCE created. Again, just inflate the square footage to avoid a scum bag underwriter trying to play detective & piss in your cheerios.

8.) Sometimes the RCE won't include debris removal so you must factor in at least another 10%

9.) Year built has a big impact on RCE

10.) Some carrier's RCE bottoms out at like 140k and just WON'T go lower. I've even tested it putting homes at like 200 sq ft

As you probably know there's the way carrier's want things done (which is ridiculously beneficial to them..) there's the way consumers want things dumb (typically fueled by moron bums who are dumber then dog $hit..) and then the way things really need be done in the field to get anything done. Don't let the carriers bully you out of business.

Just don't ever knowingly under-insure a home & you're good to go.

 

[indienoise]

Good to know on some of that. Thanks for the heads up. Thankfully not an older home, just a cookie cutter <1200 sq foot starter home waaaaaaay out in the boonies. Loan amount is actually below MSB, I would just be raising it to meet minimum coverage amount. Safeco coming in at 125, seeing Allied and Travelers wanting 140-150 like you mentioned. Not the most desirable of business, but I didn't figure they would start out throwing me the good stuff. Thing that scares me is finding out why, with a closing date one week away, this guy doesn't already have insurance.

And I just can't figure why anyone would under-insure a home. Unless they're captive trying to win a sale, lol.

 

[insurance1822]

You'd be surprised how many people wait until the last 1-2 weeks. Yes...it's definitely not a great indicator of them as fiscally responsible, but many of these people are just busy w/ life, work & buying the house. I write a ton of packages (good packages) of these people.

Also - if it's out in the boonies be careful the some of your carriers aren't recognizing split PC6/9 or 9/10. It may be plugging in a better PC class based off what you put into your rater, but upon inspection they could jack the cost or cancel the policy. Some carriers will write PC9 but only if it has a central alarm system and/or fire hydrant within 1000ft.

I've been burned plenty of times by these. Pay attention to their tiering w/ Safeco because the bum tiers will get inspected as well.

I get referrals all the time when people get quotes from their existing carrier & the mortgage guy doesn't see it until 1 week prior to close. Then he's like HOLY HECK you need to call my guy.

 

[indienoise]

Thankfully the county has a document online showing all their fire district's PPC's, so I know I've got that right. I wish they all would do that.

Hydrants, on the other hand, I've scoured google maps for over an hour yesterday and I can't find ANYTHING within at least a half mile. No answer from the fire dept. Thankfully they're only about a mile from the fire dept, but I've NEVER run into a situation like this where I just couldn't find one. I've been hoping this isn't one they reject when we try to bind.