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Property Insurance

Property Insurance

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Property Insurance

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  1. Property Insurance MODULE IV Replacement Cost Determination

  2. Module IV Objectives • Review Module III • Dwelling Replacement Cost Guide • Review Module IV

  3. Review Module III Q: How many losses can a prospective insured have to be eligible for coverage in FIE? A: No crime losses in the past three years, and no more than one loss of any other kind in the past three years. Q: How many losses can a prospective insured have to be eligible for coverage in Protector Plus? A: The insured must have had no losses in the past three years with the exception of one natural loss. Q: Can you write an HOBT policy in a first tier county? A: Yes. HOBT policies do not cover the dwelling.

  4. Review Module III • TENANT HOMEOWNERS PACKAGE • Special Requirements: • Minimum ___% deductible Loss Deductible Clause No. 3. • Mandatory minimum of $____ Theft Deductible also required on amounts of insurance of $20,000 up to $________. • Replacement Cost Coverage (HO-101) can be written if the policy is written for at least $__________ Contents Coverage. • Scheduled Personal Property (HO-160) may be written in conjunction with an HO-BT. • Maximum limit single item: $________ • Maximum aggregate total: $________ 1 250 25,000 25,000 2,500 10,000 Procedure Manual page 2094

  5. Dwelling Replacement Cost Estimation Guide Proper insurance to value is one of the most important considerations in insuring property. The insured needs to be properly protected. In addition, rates are based on the assumption that each exposure will be properly insured to replacement cost. If not, the premium developed will be inadequate and create the need for rate levels which may adversely affect our competitive position. To properly protect our policyholders and our competitive position, always encourage the policyholders to carry an amount of coverage adequate to pay for the complete rebuilding of the home and to replace the personal property. The Dwelling Replacement Cost Estimation Guide is designed to determine the minimum replacement cost of a dwelling. Procedure Manual page 2037

  6. Dwelling Replacement Cost Estimation Guide Step 1 - Select the type of dwelling that most nearly fits the description. Procedure Manual page 2038

  7. Dwelling Replacement Cost Estimation Guide Dwelling Type: One Story Single floor, usually at grade level. Property Manual pg. 2038

  8. Dwelling Replacement Cost Estimation Guide Dwelling Type: 1 1/2 Story Two floors, one grade level and one above. Upper floor may have full ceiling heights. Bedrooms at upper level. Number of square feet of upper level living area is 40% to 70% of living area of lower level. Property Manual pg. 2038

  9. Dwelling Replacement Cost Estimation Guide Dwelling Type: Two Story Two floors, both having full ceiling heights. Bedrooms at upper level. Number of square feet of upper level living area is greater than 70% of living area of lower level. Property Manual pg. 2038

  10. Dwelling Replacement Cost Estimation Guide Dwelling Type: Bi-level/Raised Ranch Two floors. One usually four feet below grade level and the other one four feet above grade level. May be set on slight sloping terrain. If a garage is built-in, it generally would be located in the lower of the dwelling. Property Manual pg. 2038

  11. Dwelling Replacement Cost Estimation Guide Dwelling Type: Split level (Tri-level) Usually having three separate levels and distinct living areas separated by different floor elevations. Grade level has foyer, family, and powder room. Second level has living, dining and kitchen. Third level has bedrooms. Property Manual pg. 2039

  12. Dwelling Replacement Cost Estimation Guide Dwelling Type: Town House or Row House Two or more single-family dwellings connected by a common sidewall. Usually two or three story with the kitchen and living areas on the lower level and bedrooms on the upper floors. Property Manual pg. 2039

  13. Dwelling Replacement Cost Estimation Guide Dwelling Type: Duplex Two-family house. Contains two separate single-family units in one dwelling. Each unit contains its own plumbing, electrical, baths, and kitchen -two of everything. Connected by a common sidewall - may have one or more floors. Property Manual pg. 2039

  14. Dwelling Replacement Cost Estimation Guide Step 2 - Calculate the Floor Area Procedure Manual page 2039

  15. Dwelling Replacement Cost Estimation Guide Measure the TOTAL FLOOR SQUARE FOOT AREA. The dimensions of basement, attached garage, porch, etc., must be noted but not included in the TOTAL floor calculation. Exceptions: 1. Residences are calculated on the total floor square foot area, including built-in garages. Deduct the cost of the built-in garage. 2. Bi-level residences must include the total lower level area including the basement garage. Procedure Manual page 2039

  16. Dwelling Replacement Cost Estimation Guide Calculation example: TOTAL square foot area Dwelling at (40’ X 25’) = 1,000 s.f. X 2 levels = 2,000 s.f. The costs of the items listed below are given in the “Additional Features” section of this manual: Garage: 2 car attached. Porch: 20’ X 8’ = 160 square feet. Procedure Manual page 2039

  17. Dwelling Replacement Cost Estimation Guide Step 3 - Select the kind of exterior construction that most nearly fits the definition.

  18. Dwelling Replacement Cost Estimation Guide • Class “A” • Masonry Block, Painted - An 8” concrete block wall, painted on the exterior. • Stucco on Frame - Stucco applied over wire and paper or solid sheathing. • Stucco on Masonry - Stucco applied over a masonry block wall. Procedure Manual page 2040

  19. Dwelling Replacement Cost Estimation Guide • Class “B” • Aluminum Siding or Vinyl Siding - Lap or bevel aluminum or vinyl-coated siding laid either horizontally or vertically over the exterior wall. • Asbestos Shingles - Asbestos shingles laid over a wood frame wall. • Wood Siding - Lap or bevel wood siding laid either horizontally or vertically over the exterior wall. Procedure Manual page 2040

  20. Dwelling Replacement Cost Estimation Guide • Class “C” • Adobe Brick -Solid - A soft brick formed from local clay, rough in shape and texture. • Wood Shakes - Wood shakes laid in overlapping layers on the exterior wood frame. Procedure Manual page 2040

  21. Dwelling Replacement Cost Estimation Guide • Class “D” • Brick Veneer - Face brick attached to a frame structure using corrugated clips. The brick provides ornamentation only and provides no structural support for the building. Procedure Manual page 2040

  22. Dwelling Replacement Cost Estimation Guide • Class “E” • Solid Brick - Solid brick wall, typically tow rows thick with each row grouted together, with face brick. • Stone Veneer - Stone attached to a frame structure using corrugated clips. The stone provides ornamentation only and provides no structural support for the building. . Procedure Manual page 2040

  23. Dwelling Replacement Cost Estimation Guide • Class “F” • Solid Stone - Solid stone wall with stone facing. Procedure Manual page 2040

  24. Dwelling Replacement Cost Estimation Guide Step 4 - Base Costs.

  25. Dwelling Replacement Cost Estimation Guide • The costs shown on the pages 2041 - 2046 represent base replacement costs for homes built after 1940 and are indicated as dollars per total square foot area. For homes built before 1940, an adjustment factor of .17 must be added when completing the accompanying worksheet. • The following assumptions are made in these base costs: • All costs assume adherence to the requirements of the Uniform Building Code. • Average workmanship and material are employed. • There is no allowance for quantity discounts. • The one-half story is equal to 50% of the ground floor area. Procedure Manual page 2041

  26. Dwelling Replacement Cost Estimation Guide Refer to page 2041-2045 for the base cost. SPECIAL BASE COST (BC) RULES Dwellings built after 1940 plaster: BC X .09 End Unit (Town House): BC X .10 Duplex (Entire House): BC X .07 Triplex (Entire House): BC X .13 Fourplex (Entire House): BC X .18 Procedure Manual page 2046

  27. Dwelling Replacement Cost Estimation Guide Step - 5 Roofing-Type Adjustment Base table includes asphalt shingles or rock roof.

  28. Dwelling Replacement Cost Estimation Guide Refer to page 2046 for the Roofing type adjustment. House Style Slate Tile Wood 1 story .11 .05 .08 1 1/2 story .07 .04 .06 2 story .06 .03 .04 Bi-level/Ranch .06 .03 .04 Split level .07 .03 .05 Town House (1 story) .12 .06 .09 Town House (2 story) .07 .03 .05 Town House (3 story) .04 .02 .03 Town House (4 story) .03 .01 .02 Procedure Manual page 2046

  29. Dwelling Replacement Cost Estimation Guide Step - 6 Interior Finish Adjustment The base cost in Step 4 contain the following finishes depending on the living area of the home.

  30. Dwelling Replacement Cost Estimation Guide Refer to page 2046 for the Interior Finish Adjustment. Option 1 = 750 - 1499 Walls: 100% paint Floors: 95% carpet, 5% vinyl Option 2 = 1500 - 2099 Walls: 75% paint, 25% paper Floors: 90% carpet, 5% vinyl, 5% tile Option 3 = 2100 - 3099 Walls: 50% paint, 25% paper, 20% panel, 5% tile Floors: 50% carpet, 10% tile, 40% parquet Option 4 = 3100 - 3499 Walls: 35% paint, 30% panel, 10% tile, 25% grass cloth Floors: 40% carpet, 15% tiel, 40% parquet, 5% slate Procedure Manual page 2046

  31. Dwelling Replacement Cost Estimation Guide Step - 7 Calculate Additional Features

  32. Dwelling Replacement Cost Estimation Guide • To the “Base Cost” developed in Step 5, add or deduct the costs for: • Bathrooms • Garage or Carport • Fireplace • Porch • Breezeway • Decks • Central Air Conditioning • Basement • Other Miscellaneous Features such as: • Alarms • Garage Door Opener • Jacuzzi/Hot tub etc.. Procedure Manual page 2047-2048A

  33. Dwelling Replacement Cost Estimation Guide Step - 8 Location Modifiers Determine Location Modifiers by first 3 digits of Zip Code.

  34. Dwelling Replacement Cost Estimation Guide Location Modifiers: Zip Factor 750 .65 751 .68 752 .68 753 .68 754 .65 755 .66 756 .67 757 .67 758 .67 759 .67 Zip Factor 760 .65 761 .68 762 .65 763 .65 764 .65 765 .63 766 .63 767 .63 768 .71 769 .63 Zip Factor 770 .67 771 .67 772 .67 773 .67 774 .67 775 .67 776 .69 777 .64 778 .65 779 .65 Zip Factor 780 .64 781 .65 782 .64 783 .66 784 .66 785 .64 786 .65 787 .65 788 .56 789 .65 Zip Factor 790 .67 791 .70 792 .69 793 .69 794 .69 795 .71 796 .71 797 .60 798 .69 799 .69 Procedure Manual page 2048A

  35. Dwelling Replacement Cost Estimation Guide Calculate an estimated Replacement Cost of a Dwelling using the Estimated Replacement Cost Worksheet (SRN #31-1609)

  36. Dwelling Replacement Cost Worksheet Dwelling Type: Townhouse (2 story) Total Floor Area: 1,200 Exterior Wall Type: Brick Veneer Year Built: 1987 Base Cost: $________ Roofing: Asphalt Interior Finish: Option 1 Adjusted Base Cost: $________ Additional Features: 1 1/2 baths 1 Car Garage Total: $_________ Location Modifier: _______ (Zip Code 77042)

  37. Dwelling Replacement Cost Estimation Guide High Value Dwelling Replacement Cost NOTE: High value homes include many features that are not standard in mainstreet home construction. The High Value Dwelling Replacement Guide is used for dwellings 3,500 square feet or more and generate a replacement cost between $300,000 to $750,000. Homes submitted over $750,000 should be supported by a current replacement cost appraisal or a detailed contractor’s estimate of replacement cost. (See pages 2050-1 through 2050-18 to rate High Value Dwellings.)

  38. Review Q: List the eight essential steps to determine the estimated replacement cost of a dwelling: A: 1. Determine the Dwelling Type 2. Calculate the Floor Area 3. Determine the type of Exterior Wall 4. Determine the Base Cost 5. Calculate the Roofing-Type Adjustment 6. Determine the Interior Finish Adjustment 7. Calculate Additional Features 8. Determine the Location Modifier

  39. Review Q: Identify the type of Dwelling from the picture below: ONE STORY

  40. Review Q: Identify the type of Dwelling from the picture below: 1 1/2 STORY

  41. Review Q: Identify the type of Dwelling from the picture below: SPLIT LEVEL

  42. Review Q: Determine the Base Cost for the following type of buildings: 1. 1 Story 1400 sq ft Class A: ________ 2. Bi-Level 2340 sq ft Class C: ________ 3. 2 Story 1950 sq ft Class E: ________ 4. 2 Story 3600 sq ft Class F: ________ $74,255 $129,550 $134,267 Manual

  43. Review Determine the estimated Replacement Cost for the following dwelling: Dwelling Type: 2 story Private Dwelling Total Floor Area: 2,640 Exterior Wall Type: 80% brick vaneer, 20% wood frame Year Built: 1978 Roofing: Asphalt Shingle Interior Finish: Option 2 Additional Features: 2 1/2 baths 2 Car Garage Open Breezeway Deck Zip Code: 77478

  44. Quote of the day.. “In business, the competition will bite you if you keep running; if you stand still, they will swallow you.” Semon Knudsen