Increasing Dwelling Coverage Fani Jenkins asked 2 years ago
Increasing Dwelling Coverage


Our home was in the Marshall Fire in CO, but survived with smoke & fire damage.

Prior to the event, we were underinsured.

Since then, we’ve been trying to increase our dwelling coverage with our insurance company (USAA).

After two attempts, we were able to increase the coverage to $240/sq foot – the max the insurance company was able to do.

However, we are learning that the rebuilding costs in our area are between $400 and $500/sq foot.

Our insurance company is saying our home is not worth that much.

How can we adequately insure our home so that we are not underinsured in a future event?

Thank you,

Fani Jenkins

2 Answers
Answer for Increasing Dwelling Coverage United Policyholders Staff answered 2 years ago

If USAA won’t increase the amount of your dwelling coverage to a more realistic number, your other option is to add on the largest replacement cost extension rider they offer, (200% is the highest we’ve heard of but not sure what USAA will sell you) plus 20% or so in building code upgrade coverage, or switch to another insurer. We’re running this question by a few Colorado-based insurance agents as well, but we don’t think you can supplement your dwelling coverage with a separate additional policy – it’s either USAA on their terms, or one of their competitors.

John Putnam John Putnam Expert answered 2 years ago

Based upon your inquiry, I would suggest you consider the following steps to revisit this issue with your insurance carrier:

  1. Research more precisely the “re-build” costs for your home by either getting an actual bid from a local builder and/or actual evidence of these costs from neighbors who have lost their homes. Pictures, recent upgrades, neighborhood comparable costs, and any other information to suggest that the replacement cost should be higher is what you to learn in this step. Reason: my information suggests that the actual “rebuild” costs still vary widely so it is important to have better evidence upon which your underwriter can consider to increase your limits.
  2. Re-contact your company customer service / agent and ask for the following:

    a. A copy of the calculation showing their calculated replacement cost estimate

    b. The data the used to develop the estimate – you should make certain that all data elements are correct especially square footage, type of construction, number of rooms, and any recent upgrades.

    c. A description and amounts of any additional coverages provided by your HO policy that would help to close the gap between the current proposed amount and the amounts that you research in #1. Also, ask if they have available additional endorsements to increase the replacement cost figure ie extended replacement, higher law and ordinance, inflation guard, etc. Have them calculate the final cost per sq foot based upon these additional coverages already included and separately the other endorsements available.

  3. If you are unable to close the gap between the amounts in #1 and #2 with your customer service / agent representative, ask to speak to either their supervisor or underwriter and plead your case for the higher amount. You might also want to ask them to consider adjusting your replacement value based on actual cost per square footage estimates for similar houses in the Marshall Fire that they are replacing. If that is unsuccessful ask for the telephone number of the central customer service office to discuss this issue further.
  4. As a last resort, Colorado law does allow you to submit a qualified building estimate from a contractor to your insurance carrier who is supposed to accept this figure as actual replacement figure. This may require some expense from a builder to prepare the estimate and will raise your final premiums to meet the higher Coverage A amount but gives you an option to handle accordingly.

Make sure to document each step as necessary for any future references.