Home insurance agent wants new pics for “proper” coverage. Whats the deal?

You have a good agent. The vast majority of policyholders are found to be underinsured at the time a claim is presented. Many people honestly forget to call to update their property values when they renovate their homes, do an addition, etc. Unfortunately the problem comes to a head when there is a claim because they are penalized by the same percentage that they are underinsured on that claim. For example you add an addition costing $ 50,000 to a $ 200,000 home and you fail to tell your insurance company or agent. You subsequently suffer a fire to the kitchen and have total damages to the structure of $ 30,000 and you have a $ 1,000 deductible. You would end up getting a check for the damages of $ 21,500, i.e. you lost $ 7,500 (or 25% of the claim) because you were underinsured!

The other situation is that the construction software that is currently being used compared to the software used in 1996 has been greatly enhanced and is now more accurate thereby resulting in a more accurate replacement cost valuation.

The replacement value on your policy and the additional replacement cost guarantee are all subject to your policy value being accurate and to your accepting the calculations provided by your company and your notifying the insurance company of any renovations or additions to your home. If you believe the insurance company’s valuation is inaccurate, you can counter it but you would have to provide documentation verifying your valuation.

I encourage you to not only cooperate with your insurance agent but also let them into your house so that they can determine your replacement cost as accurately as possible. The only possible negatives in this can be an increase in premium–which can only happen if they end up increasing your coverage. However, if this happens, it is necessary. The second possible negative is if the agent sees anything that needs to be corrected, they will require that you do it. For example if the agent finds that you store “things” next to your furnace, they will ask you to remove these items since they are a fire hazard. Another example if they find an abandoned vehicle on your property, they will ask you to remove it since it can be a liability hazard–we had a case in my city a few years ago where a couple of kids 8 & 9 years old went into an abandoned car in August and got stuck and died of heatstroke. Again anything they find like this is ultimately to your benefit since it avoids a claim which is never a good scenario.

Also take advantage of your agent’s time and have him or her review your entire account. It is better to know all your options than be surprised with a claim that could have been covered but for a simple add on.

Hope this helps. Good Luck!