Having been an underwriter, I remember the detailed replacement cost estimators that we required agents to use before submitting an application to us for review. Admittedly that was many years ago, so I went online and ran a few quotes on carrier websites on a relative's property. The lack of detail required was surprising, as was the lack of guidance. One carrier asked about dogs and exotic pets; another just asked about dogs, one asked about cats, farm animals, nonpoisonous snakes and other pets as well as dogs. Some did not ask about animals at all which makes sense, as animals are a liability issue, not a replacement of property issue. Two were more detailed, and one showed examples of different levels of construction and interiors so the user had a better understanding of the differences between economy, standard, above average, custom and premium. Most however provided scant instruction and guidance, so that your average insured could easily make mistakes that would change the estimated replacement cost.

 Some pulled from public records and determined square footage, number of bathrooms and basic features from those records. Some did not even ask for upgrade information, even for a house built in 1967. Those that pulled from public records did not ask for style of home or construction type, they pulled it automatically. Others asked the applicant for that information. Not all asked about pools, trampolines, fire pits or swing sets. While pools and trampolines are the standard plague of underwriters, fire pits are more and more common and have their own hazards, as do swing sets. These are both liability and property issues.

 Most of the options for bathroom and kitchen styles were along the lines of basic, custom and designer. However, there were no explanations of the three categories. Many insureds may consider their kitchen designer or custom when it is really only basic. Many insureds could have something in-between; a bathroom where there may be some upgrades, but it falls somewhere in between basic and custom. It seems that it would be easy to create an estimator that gives the user some guidance and direction. None asked about being handicapped accessible or handicapped modifications. Such modifications can be extensive, depending on what the individual requires. Some quotes had options for quality of carpet and some did not, and none listed linoleum, which is still present in many homes.

 The property I quoted is in a flood plain. While none of the carriers provides flood insurance, wouldn't it make sense for them to indicate that the property is in a flood plain, that the homeowners policy does not cover flood, and that the insured needs to go FEMA.gov for information about flood coverage? It would provide much needed information to the applicants, and help educate people about flood insurance in general. If the carrier can pick up date of construction and square footage from public records, it can certainly pick up flood zones.

 I then looked at a few estimators not tied to particular carriers. Building Cost Calculators used categories from minimum standard to luxury, with brief explanations of the categories. The explanations could have been better, and there were many where the categories just didn't fit the house. It was more detailed than the carrier estimators were, and wanted square footage of driveways and other features people may not know. It asked for the land value as well. This result came up significantly higher than any of the carrier results. The second one, My Bluebook was less detailed, but came up with a similar value. Dwellingcost.com was the most barebones estimator of all, and came up with a value similar to the carrier estimates. The general difference between the carrier estimates and the noncarrier estimates was roughly $100,000. This is a significant difference in value. Therefore, I started looking up cost per square foot for the area. That varied as well, from $127, which aligned with the carrier replacement costs, to $219 or $230, which aligned with the stand-alone estimators. Obviously, the most reasonable way to determine an accurate replacement cost is to have the property appraised by a professional. Each estimator was lacking in some form, and none left me with the feeling that I had a solid, proper replacement cost for the property.

 These differences in estimator results highlight just how easy it is for insureds to be unintentionally uninsured. While some insureds will balk at a carrier's request to increase coverage to value, if carriers aren't reviewing the property, and are relying on information from the insureds to establish replacement cost, it is easy to see why so many are underinsured. It is also easy to see why insurance departments are urging carriers to pay more on these losses. If a carrier allowed an unexperienced insured to set the replacement cost, then mistakes in replacement cost are bound to happen, and the insured should not be punished for something he does not know when carriers can readily have the property inspected or at least have an estimator run by someone familiar with them and housing construction.