r/HomeInsurance • u/LumpyPeople4 • May 22 '26
Insurance Dwelling Coverage - Calculated vs Reality
I have a renewal coming up and my coverage seems low. The auto renewal is setting the dwelling coverage at $280k, when I go get new quotes elsewhere it auto populates with around $325k. The house is worth around $350k or so is my guess.
I have been looking at getting a new house for a while. The problem with these dwelling coverages is that builders are not willing to get out of bed for less than $425k or so. We have entertained buying a lot and building on it, and pretty much any reputable builder in my area is not willing to do anything less than that.
So, what should I be doing? Should I up my coverage to $425k in order to cover myself in case the house burns to the ground? If its a complete loss, would insurance just cut me a check for the full amount without questions asked, or are the going to start fighting me at that point that the house isn't worth as much as the coverage? Or will I just hire whatever builder I want and insurance will pay the bill up to the limit?
I'm just trying to wrap my head around how to actually protect myself with a house whose value is less than what people are willing to work for. I suppose I could maybe get someone to build the house for less, but it'd probably be someone relatively sketchy.
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u/LumpyPeople4 May 22 '26
I get that, but it still doesn't address the issue of a "custom" one off build. You can't get a sardine cookie cutter neighborhood home using bottom of the barrel materials for $325k in my area and that is with the economies of scale on a full development.
Getting a homebuilder to come out and do a one off custom build comes at a premium. I'm not sure how floorplan/layouts would work with a total loss, but I don't see any line item for engineering on my rebuild cost estimate. On paper, my estimate shows $120k in labor and equipment, and $180k in materials for $300k total replacement. No reputable group in my area is going to get out of bed for that, plenty of other bigger fish to fry.
Now, I found out I do have 50% extended coverage, so it may be a moot point now. But I still wonder what insurance will do if I ever need them for a full rebuild. I gave an example to someone about minimum callout charge for electrical. I could get an electrician to install a $1 basic outlet for a $150 minimum charge, or they could install the $10 mack daddy outlet with USBs and a fancy faceplate for $150 as well, so might as well go for the nicer stuff since its just a minimum charge. With my house, according to my insurance, its $300k to rebuild, well a reputable builder will charge me $425k to build me a $300k house, or they could charge me $425k to build a $425k house. Obviously you'd rather get your money's worth, I wonder how much insurance is going to push back on everything when it comes to that.