We're having a challenge insuring our 1867 Victorian. The companies we've gotten estimates from want to ensure it for replacement value of $750,000 but the market value is $250,000.

Any suggestions for companies with a more realistic view?


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WE are insured with Erie. WE are insured over the market value but not as much as yours. Find the agent in your area and see what happens.

Good luck
I had the same situation...purchased my home for $230K and the insurance companies were wanting me to insure for replacement cost, which they estimated to be right around a million. After many many conversations with many many different supervisors, I was able to get one of them to understand that there is no such thing as replacement value of a historic home--with a million dollars in hands, I could never rebuild this home, so why pay the premiums and pretend. I got them to lower their mandatory insurance amount, but its still in the high $300-low-$400 range.

The National Trust for Historic Preservation has a section on their website which deals with insuring historic homes--I haven't looked into it, but they seem to be working with one or two insurance companies (or it may be an in-house deal) to insure historic properties. Might be worth looking into...
We just finished getting new insurance thru the National Trust for Historic Preservation - Company is National Trust Insurance Services, LLC. They have a very comprehensive package. Not the cheapest, but we were way under insured.

The agent I dealt with is Moira Gettens - 410.547.3291.

We too are insured with Erie but have the opposite issue. My agent won't insure mine for replacement, because he says that Erie will not insure for more than 2x market price, and our house would probably cost 5x market price to rebuild as is. So, he issued us a "market value" policy that insures up to "market price." The downside is that he rarely bumps that up, so I am pretty sure that I could not replace for what I am insured for, which is I think $150 or $160k (plus extra for contents, garage, etc.). I think that an equivalent historic home in an equivalent neighborhood would cost me maybe $200k, so I am not wildly underinsured, but definitely somewhat. The upside is that I think they only charge me $320 a year for that policy with a $1,000 deductible, so it is costing me very little. Also, Erie agents vary greatly in how they interpret things, so I know that I could get a different policy if I shifted agents.
I worked for Middle Oak insurance company for two years as part of the team that designed and managed their Restorationist policy, created especially for owners of historic homes. I no longer work for them, but I sure did learn a lot about homeowners insurance during that time.

Replacement value and market value are two entirely different concepts.

Market value is what someone will pay for a house and the property it stands on. This value varies a lot from year to year, sometimes up and sometimes down, depending on many factors: location, financial status of recent buyers of nearby houses, the current toxic mortgage crisis, etc.

Replacement value is what it would cost to actually rebuild the house. It does not include the value of the land. This value goes up over the years, and has not gone down for nearly a century. This is a much more predictable value and relates more directly to just the house. Since the policy is primarily to cover the house, this is the value the insurance company uses to set the premiums.

There are other ways to value a place too, such as the intrinsic value, what it is worth to you as a place to live, raise a family, work, etc. It's easy to get confused until you understand each of these different ways to value a house.

I suspect you are looking for a company that will come up with a lower replacement value so you will pay lower premiums. This can be done if you find a company that does not know what it would actually cost to replace your fine old Victorian. Let's say you find one that will accept a $250k replacement value. If you have a total loss they will pay $250k. Then where are you? You can't rebuild a $750k house with only $250k.

There are other strategies for lowering premiums, such as self-insurance. Many homeowner policies are sold with a very low deductible, such as $250. If the deductible is raised up to say, $1000 or $5,000 then the premium will be less. Of course, you have to have the discipline to keep that $5k or $10k on hand so if you have a loss you can use it.

Back in the 1970s I bought my first house. I was poor, with week-to-week finances, and could not afford homeowners insurance, but my house loan required it. I just happened to read an article about self-insurance and deductibles. My deductible was $250, but if I raised it to $1000 my monthly premium payments would be $50 less. I didn't have $1000 to put in the bank for self-insurance, but I figured since I was a carpenter I could easily repair any loss up to the value of $1000 myself, a risk I could afford to take on my own without the help of an insurance company. Well, each month I paid my premium and put $50 savings in a special "self-insurance" account. After 20 months I had a nice little $1000 self-insurance fund, which was actually more than $1000 because it was earning interest. On the 21st month I had my agent raise my deductible to $2000 and I saved even more on my monthly premiums. My insurance agent was surprised I knew so much about insurance, and so was I ! Then I did it again and again. After 10 years I was able to bump up to a $10,000 deductible and my premium was lower than ever. When I bought a new house my new insurance agent thought I was crazy for insisting on a $10,000 deductible. Right, crazy like a fox.

Over the years I've never had a loss so my self-insurance fund has grown and grown. It's now big enough that I could actually build a modest house with it if I had a complete loss, though my current house is not modest in size. The interest from my self-insurance fund even pays for my current insurance premiums. By careful management over the long-term I have bested the insurance industry at its own game. When I go in to see my current insurance agent he jokes about us starting up an insurance company--no thanks, I've worked for an insurance company, and I'm happy to just take care of myself.

John Leeke
excellent information John...thank you for sharing. I'm in a similar but reversed situation as you when you started out your self-insurance. We went with a lower market value policy only because I felt it was ridiculous to have the home insured for a million dollars, in a substantially poorer area and without being able to rebuild for a million to begin with. In all my years of living in Central Florida, my parents and I never had an insurance claim due to hurricane. Within months of purchasing my home, Hurricane Gustav was kind enough to give me sufficient damage to give me some added work for the next couple of months.

So now the reverse engineering part--since the home is insured for 'market value', that trickles down to the replacement costs given by the adjuster. 100-year old windows get depreciated for a payout of approximately $80 per window (labor and materials), multiplied by the 7 windows broken. No 'landscaping' covered, despite losing 17 trees total, including 2 very large producing pecans, 1 large oak, and the only gingko biloba tree within a 100-mile radius. etc etc. I'm finding myself putting my skills to use not because I really want to (although I do enjoy it), but rather because the insurance payout wasn't sufficient to cover a new roof, let alone a new roof and the additional damages incurred throughout the property.
We had a similar situation. The company that covered our cookie-cutter subdivision home in town was more than glad to cover our "new" place. The inspector-for-hire showed up and tut-tutted around the place, didn't want to discuss anything with me and left to complete his report. When the report came back a month later, the replacement value for the house (1840 rubble stone 2400 sq. ft. 1.5 story farmhouse) was $800,000 with a premium to match because we were more than some magic distance from town for fire response and there are no fire hydrants. Never mind the 1/3 acre pond in the side yard built by the previous owner on a rural fire safety grant - we have our own fire hydrant that can fill the house to overflowing. On top of that, the inspector deemed the two stone barns unsafe and recommended demolition. So, not only was the premium outrageous (10x the house in town) but the outbuildings were considered a liability and had to be gone within 6 months or we weren't insured! After launching into orbit, I got on the phone to the agent for alternatives but then it became abundantly clear this brokerage and their inspection contractor had no clue about what insuring an old house required and the inspector knew even less than me about stone buildings. A stone mason had already told me that while they need attention, the barns will be standing for a long time yet. In fairness, I should say we had a great policy and good service with a very competitive premium on the house in town but the old house was something they just didn't "get".

A friend has a similar vintage stone house and referred us to his agent with a local mutual insurance company. The agent is also an old house owner and a neighbor. He looked the place over himself and took a bunch of pictures - no inspector needed. We discussed the options for replacement / rebuild. We picked the amount of coverage we wanted and settled on a replacement value for a modern house of the same square footage. Sure, there is some risk with the co-insurance but short of a massive explosion or an irate heavy equipment operator, the shell of the house will withstand most indignities mother nature or us can throw at her so rebuilding would be most likely replacing the interior/roof.

So, shop around. If you don't like the answer, try another company. And don't hesitate to discuss options with them and see if there is a realistic compromise. Make the agent earn their commission! Good luck.
My house is currently insured by State Farm. My replacement cost coverage is much higher than current market value. In my extremely deprressed area (Lorain, Ohio) the market value of my house after we put a slate roof on it in 2002 was $165,000. Today I would be extremely lucky to get $95,000 for it, if I put it up for sale. However, the replacement cost coverage portion of my homeowners insurance is $385,000 for the dwelling. I have just obtained a quote from the Hartford Insurance Company through my AARP membership. The Hartford quote is much higher than what I am paying now, but the replacement cost coverage is also higher than what I currently have. I have been told by several insurance companies that I am under-insured. Most victorians are not the run of the mill subdivision type homes, but I found that insurance companies do not want to go into too much detail. The more detail in the policy the higher the price. Also, if a house burns to the ground, or is destroyed by some type of weather event, the insurance company will pay to re-build your home as it was, per the replacement portion of your policy. My agent has always told me to photograph, photograph, and photograph, and keep the photos in a safety deposit box at the bank. Photograph the house structure, not just the contents. Especially if you have unfinished space, such as an attic or basement. The beams, wall studs, wall sheathing, roof sheathing, joists, etc. Today's lumber cannot match turn of the century lumber in size or quality. I suspect that since your house was built in 1867, it would take every bit of $750,000 to re-build matching the original.
I have a situation where I have a 1939 solid brick home with concrete walls on the enterior. This house has been on the market for a year and, assessed value is $99,000 before all my upgrades added. I am currently renting the house because it isnt selling but my Insurance company is telling me I HAVE to insure it for replacement cost of $350,000. I told them if something did happen to the property I would not replace it,,,,,,,,because I cant even sell it at $120,000. I want to insure it for the $120,000 value because I can not afford the premiums of of the replacement cost. Is this true do I HAVE.... to insure it for replacement cost or are they scamming me for more money???
We, too, had the same issues. My old insurance company wanted to insure for replacement cost (4.35 mil.) when it is only valued at $129,000. I don't think there is a building in the entire state of ND worth that much. And like most of you, the building could not be replaced any way. My insurance agent found that Loyds of London will insure for loan amount plus personal property. Now we have very reasonable homeowners insurance.

Good Luck,
I was told that having working fireplaces in an old house adds substantially to the premium. I have eight, none of which are are currently in working condition. My insurance company gave me the option of insuring them or not. They were going on replacement value, and to add eight fireplaces into a structure is rather expensive. Would have almost tripled my premium. You might have similar issues if there is a slate roof or some serious hand carved woodwork that would need replicating. Check around for a mom and pop company.


When we bought our 1886 in Iowa, we figured we would also simply contact our then insurance company.  Said un-named national company absolutely refused to talk to us about homeowners insurance because (are you ready?) we rented the pasture out for cattle!  State Farm and a few others refused to talk to us because the house was built before 1900, claiming it was a national standard.  The local brokers in our small town believed some old stories about collapsing walls and floors falling in; they wouldn't bother to drive the 5 miles out of town to find out the stories weren't even true.  They also insisted that any policy had to be for an unoccupied residence since we were going to be gone for the first couple of winters because there was no furnace in the house yet.  Excuse me, ever heard of snowbirds!?

We finally went to another town to talk to a broker who found a company that would cover the house without the replacement cost or market value problems.  We insured our house for what it would cost to build a 4 bedroom ranch with a family room.  Why not?  We would never be able to rebuild it as it is and it would be nearly impossible to find someone who could do the intricate woodwork anyway.

Next year, we hope the insurance will be a little less since it will have been occupied for a year instead of abandoned for several years.


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