Increase in insurance

[Fernando]

My insurance broker justified the price increases because of building cost increase, insurance companies exiting CA, and natural disaster.
He said average replacement cost in San Francisco is about $400-$500. WTF
He said I should be grateful my cost to rebuild is lower.
For appraisals, should I be using $400-$500/sf in cost approach?

 

[Terrel L. Shields]

Past two years insurance has increased like 20% each.

So has property values, right? Why do you think some of us say that inflation is the most insidious tax you pay.

should I be using $400-$500/sf in cost approach?

Replacement Cost new is lower than Reconstruction Cost new because a partially damaged building has both demolition and rebuilding to consider. My cost book says SF costs are 33% higher than national average and that does not include all permits, zoning change issues nor entrepreneurial profit.

 

[Fernando]

So has property values, right? Why do you think some of us say that inflation is the most insidious tax you pay.

I never heard of insurance increasing based on increased property values. When values dropped, I didn't see insurance dropped.

Replacement Cost new is lower than Reconstruction Cost new because a partially damaged building has both demolition and rebuilding to consider. My cost book says SF costs are 33% higher than national average and that does not include all permits, zoning change issues nor entrepreneurial profit.

Chance of total destruction of my building is rare (typical home insurance doesn't cover earthquake). I was thinking if continual increases, I'll ask for lower replacement cost coverage.
My insurance broker said I already from past request lowered the replacement cost. I want to go even lower and take my chances.

 

[Terrel L. Shields]

I never heard of insurance increasing based on increased property values. When values dropped, I didn't see insurance dropped.

Duh... they are often priced in dollars per thousand insured. And they are not going to let you insure any such amount as you want. When values drop, "Oklahoma Lightning" strikes. A lot more homes burn during tough times...I am not saying arson but I am.

I want to go even lower

Carry a higher deductible - Carry say $100,000 deductible and you suffer the first $100,000 of repairs. They don't have policies that cover nickel and dime stuff and you carry the back $100,000 of value.

Chance of total destruction of my building is rare

A large fire is almost always 100% loss. You need earthquake insurance even if with a high deductible.

 

[Fernando]

Duh... they are often priced in dollars per thousand insured. And they are not going to let you insure any such amount as you want. When values drop, "Oklahoma Lightning" strikes. A lot more homes burn during tough times...I am not saying arson but I am.

I'm surprise insurance companies aren't flexible in allowing customer to choose amount they want building to be insured like a life insurance.

Carry a higher deductible - Carry say $100,000 deductible and you suffer the first $100,000 of repairs. They don't have policies that cover nickel and dime stuff and you carry the back $100,000 of value.

I keep asking for higher deductible but premiums keep increasing. Thus the point is why keep increasing?

A large fire is almost always 100% loss. You need earthquake insurance even if with a high deductible.

Earthquake insurance is too high and so is the deductible. Chance of earthquake is so low I'm willing to not waste money. And you can always count on FEMA and government to step in.
Like now, some criticizing Biden (why?) for Maui fire for not doing more like making comments (or lack of it) and when he be going to the scene.

 

[Fernando]

My other insurance broker told me she didn't have any insurance company to consider my property which had a claim last year.
Looks like I better stick with my existing insurance company and pay the high increase for this year.

 

[Fernando]

This year my commercial insurance increased again near 20%. I don't even raise my rents that high.
One company said they won't renew one of my properties (someone must have seen all the ceiling stains but there's no current leaks).
Anyway, my broker is looking for another one. I hope it won't be over $6,000.

 

[Dublin ohio]

I'm surprise insurance companies aren't flexible in allowing customer to choose amount they want building to be insured like a life insurance.

Is you property free and clear? If you have a mortgage. The lender will have something to say about coverage.

 

[Tom D]

insurance rates aren't based on your value or just replacement cost . the insurance co has to take into account the overall amount of money it has put out during that year. this is why actuaries make really good money, they figure out the risk factors, pretty accurately. you area may have other risk factors which affect the overall loss to the company. too many fire loses, or rain loses, and the insurance co are leaving the calif marker. florida now has the same problem, but with the hurricane weather instead of fires.
king fernando, why is it that the wealthy like you always complain about their expenses on their profits,

 

[Fernando]

insurance rates aren't based on your value or just replacement cost . the insurance co has to take into account the overall amount of money it has put out during that year. this is why actuaries make really good money, they figure out the risk factors, pretty accurately. you area may have other risk factors which affect the overall loss to the company. too many fire loses, or rain loses, and the insurance co are leaving the calif marker. florida now has the same problem, but with the hurricane weather instead of fires.
king fernando, why is it that the wealthy like you always complain about their expenses on their profits,

Didn't mean to be a complainer......-------....... yes, I'm a complainer that insurance companies increasing or stop insuring my commercial properties.
My condo insurance increased like 1-2% and under $400. Should have invested in residential. Commercial properties didn't increase in value as much as residentials.
My commercial insurance increased near 20%. It can't be that commercials cost that much more to build.
I do noticed that the ones in San Francisco really shot up the most.