Home insurance in Texas (homeowners insurance, mortgage, loan)

[doonboggle]

Being from the west coast, home insurance coverage can always be adjusted in the premium fee to exclude land value.
WHY? Because land does now burn in the case of fire, etc..
So over the years, not living in a flood zone, had the value of the lot-parcel=acre-etc. excluded.

Now, living in Texas ... new last month ... have been told by agents that the coverage cost MUST include the land value. In other words if the appraisal shows to replace the house would be 100K ... and the lot is worth 25K ... then the coverage MUST be 125K ... and fee applied using that.

Need comments, etc.

Thanks

[kevcrawford]

What comments are you looking for? Someone to rant about it with you? Seems to me that's just the way it is, and that no comments would really change anything.

[TXsurburbanmom]

Do you have a loan on the home? If so that amount includes the land and must be paid back to the mortgage company. Obviously the land doesn't burn up but I guess the concept is that someone wouldn't rebuild and would just want the loan paid off. I wasn't aware you could exclude the land value but then I only worked home insurance for MA when I worked at USAA and it's been a long time. Also, I've never lived in a house long enough to pay it off and try and exclude the land!

[HillCountryHotRodMan]

I'm pretty sure this has to do with liability issues. You probably wouldn't want to nix the insurance on the land anyhow. You don't know what's going to happen on your land. Someone might get injured or get half their face eaten off by a zombie within the property lines. Seems like a no brainer to me.

[01Snake]

HO insurance DOES NOT cover the land a home sits on. Premiums are based on cost of home (or at least 80% of its value). There are endorsement for such things as trees (fire & lightning coverage only with typically a $500 limit) but the land isn't included.

Sounds to me like the agent your getting quotes from is simply trying to increase the dwelling amount to bring in more premium.

[ged_782]

Having the land insured is something new to me.

I adjusted my homeowners insurance quite a few years ago to include "replacement" cost coverage on the dwelling. The insurance company sent someone out to measure and visually survey/photograph the exterior of the house at that time. I spoke to my insurance agent after this was done, to find out how they determined what amount the replacement cost would be. She explained that replacement cost was determined by local prevailing construction costs per square foot for the type & grade of construction of the dwelling & any accessory buildings, and that the coverage limits would be subject to annual adjustment to reflect changes in those costs. She also emphasized that insured replacement cost should not be construed as market value. I don't recall any discussion of insuring the land.

I also have replacement cost coverage on the contents, which is factored as a percented of the dwelling coverage limits, and I have liability coverage which is a fixed dollar amount that hasn't changed in years.

[jbiggs]

Originally Posted by doonboggle

Being from the west coast, home insurance coverage can always be adjusted in the premium fee to exclude land value.
WHY? Because land does now burn in the case of fire, etc..
So over the years, not living in a flood zone, had the value of the lot-parcel=acre-etc. excluded.

Now, living in Texas ... new last month ... have been told by agents that the coverage cost MUST include the land value. In other words if the appraisal shows to replace the house would be 100K ... and the lot is worth 25K ... then the coverage MUST be 125K ... and fee applied using that.

Need comments, etc.

Thanks

If that is what your insurance agent is telling you then they are blowing smoke up your rear to increase the premium costs and their commissions. What I would do is to contact the Texas Department of Insurance (TDI) and ask them the same questions you are asking here. When you do make sure you have in the question "My insurance agent XXX, license #XXX is telling me....". Agents are licensed by TDI and the policies they sell (if it is an "Admitted" policy) are regulated by TDI. The web site for TDI is Texas Department of Insurance Home Page and they have contact information there. TDI is a good bunch of people and will help you understand. They will also chase an agent that is deceiving the public as they control the agent's license.

Another problem we have here in Texas is that insurance companies are allowed to use highly inflated actuarial tables and charts to calculate the "Replacement Cost" of your home. As a result they are claiming to replace a $150K home is going to cost $300K which is total BULL! The reason they do this is linked to the new way (new as of some years ago) that most insurance companies are offering deductibles. The insurance company lobbyist got the State of Texas to approve forcing a percentage of the replacement cost as the new deductible, instead of a $500, $1000, or other deductible amount. The typical deductible is now 1% of the replacement cost. The higher they quote your replacement cost then the higher your deductible. Simple math shows that if they used an actual replacement cost of $150K your deductible would only be $1500. But by using inflated tables and charts your replacement cost is now $300K and the deductible is $3000. All the while they continually up their annual premiums and reduce the coverages. In essence you wind up paying a high cost for catastrophic insurance.

More people need to complain to TDI, write your representatives, sue the insurance companies, etc., etc., or the nonsense will continue!

[Dr.Mcninja]

This is simply that agent trying to sell you more.
On my house and property, the land is worth probably 2x as much as the house, so the HO and Windstorm insurance cover much less than the mortgage I have. But they do cover enough to build a new house on the land.

[Canine*Castle]

I don't know, but I do know that Texas has the highest homeowner's insurance rates in the entire country. Property taxes are quite high as well.

[Elmebrigge]

There is no doubt that in this modern era tranporatation and traveling has become very easy and very fast. The fast speed of vehicles have many dangerous consequences. I always prefer to get insurance for my long travel tours whenever I visit for business meeting in different countries.

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