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By Julie Martin | Agent in Mobile, AL

Alabama's Affordable Homeowner's Insurance Commission Forum Meeting

We are on our way to the Alabama's Affordable Homeowners Insurance Commission Forum Meeting. It is being held today from 5:30pm to 8:00 pm in the West Ballroom of the Mobile Convention Center.

There is one issue that we have not seen or heard anyone talking about, that if corrected could actually make a big difference immediately. We hope to have an opportunity to address this issue. It concerns the amount that insurance companies claim is necessary for replacement cost coverage. I am not just stating a problem. I also have a possible solution.

Did you know?

· Insurance companies use NATIONAL construction cost numbers to determine how much replacement cost coverage is needed.

· Local construction costs are less than the national average in our area.

· Even if you have a low mortgage or no mortgage, in order to have replacement cost coverage on your home,  insurance companies use numbers that are too high for our area.

· MOST homeowners are paying for more insurance than they need.

· They use national numbers for how much insurance you need and then they charge you more because you live in Mobile or Baldwin County.

· By claiming it would be too difficult to compute local numbers the insurance companies are getting away with highway robbery.

·   The excuse that the insurance companies don’t have a better way to determine replacement cost coverage is absolutely no excuse for over-insuring everyone and therefore over-charging everyone. 

· There is no system in place to dispute what the insurance company claims is the replacement cost coverage.

· We need a system to dispute the cost to replace.

If your insurance company says it is going to cost $150,000 to replace your house, but you can get a written estimate from a licensed home contractor or appraiser that says the cost the replace your house would be $100,000 and you owe $100,000 or less, you should be able to buy less insurance.

Our Proposed Solution:

Appraisers are required to determine the sales value of homes and also THE REPLACEMENT COST based on local standards. The system they use is the Marshall Swift book. It contains National costs as well as local costs for every region of the country.
Homeowners should be able to dispute the coverage required just as we can dispute the value assessments for our property taxes.
If a licensed home contractor or appraiser can furnished a written estimate  for a replacement cost less than the insurance estimate, the home owner should have the right to buy the coverage they truly need.


By Prof,  Tue Aug 30 2011, 19:27
The author needs to become better educated on the tools insurance companies use for valuation purposes.
Insurance companies don't typically use the M&S book.
They most often use software from a different division of M&S/B and those models are based on local (ZIP) costs and the estimated cost to rebuild, which is greater than the estimated cost of new construction.
Homeowners can access it at accucoverage.com

Does the author have claims experience data to substantiate the position that over-insurance is common?

Under-insurance is epidemic. After careful study of consumer complaints following every wildfire, California enacted tougher standards and agent education this year to protect their homeowners from this type of uninformed nonsense.

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