Where readers ask, and we (the community) try to answer:
Greetings everyone:
I was wondering does anyone out there have a good way to determine how much dwelling coverage one needs in the homeowners insurance in the city of San Francisco because I noticed when I get a quote from insurance companies, the dwelling coverage really ranges big because from what I was told, it’s basically the squae footage in living space multiplied by the cost per square foot to rebuild from scratch which has a big range. Assuming you were buying a home on the market which is not new, one major insurer said to use the appraisers cost of rebuilt on the appraisal report while others basically said it should be based on the cost per square foot whch ranges from $180 to $375. My question is does anyone know what the cost per square foot is or how to find out and I thought cost per square foot in general does not include the roof and foundation so will probably need some formula to figure that part out so it truly is a cost to rebuild 100% and not just the floor, ceiling and walls only. A good example is for a 1065 square foot home in San Francisco, there were few insurers that said coverage is $200k-$250k while some places said $350k-$400k. It’s hard to use the mortgage companies calculation because I think they base it on either the loan amount or the purchase price so it depends if you got the property at below and above the actua rebuilt cost. Thanks in advance for any input!
Cheers,
Thanks for the question, and reading theFrontSteps. When you’re ready to buy that house (don’t think we can’t see your Clean Offer activity-remember that access is in exchange for agreeing to work with us), you’ll have all your questions answered, and be able to thank us and our community for it. Now get yourself out there and spread the word about our site! You know we’d do the same.
An interesting question. Having built a house from the ground up in the city (and so having a pretty good idea of the cost), my belief is that most people are chronically underinsured. Even in the current construction market (slack), it would be very difficult to achieve lower than $325/sf construction – especially on a smaller property, where there is less space over which to spread the cost of the expensive bits (kitchen/bathrooms/foundation). Add in permits, professional fees, course of construction interest and temporary living accommodations and it soon becomes obvious that most places could not be rebuilt for their current market cost (let alone what they are insured for – which is usually much less than the current market value). So, as strange as this may sound – in terms of construction cost, pretty much everything in the city is undervalued. . . . Now, assuming the insurance is needed to rebuild after, lets say a major earthquake. . . . . seems to me that construction prices would spike after an event like that, as the builders and professionals would be slammed.
Thanks for your input. Earthquake and Flood isn’t covered anyways so they are talking about total rebuild costs and remember that the $325/sq ft is only for living space which means the 2nd level of a 2 story Single Farmily Home. There is still the garage with basement underneath which is the hard part to figure out the price per square foot. Living accmodations is part of loss of use coverage which is typically 25%+ of the dwelling coverage. Forthe spiking, that’s where the extended 125-150% coverage comes in to cover a 25-50% increase in prices.
After the Typhoon Katrina incident, we always make sure that our home is always insured that is why we always get premium home insurance. .-;