Home Owners and Barn Insurance - Value to Insure?

[GPintheMitten]

I have questions about getting insurance that is affordable.

We are buying a 19 acre horse farm in Mid-Michigan. House is 3700 sq. ft. (2 family) ranch built in the 1980's. Horse barn is 30x50 gambrel roof style with stalls, aisleway and hayloft above, with an 18'x40 leanto for workshop. There is an 80x50 indoor riding arena attached to the horse barn. The barns are all pole construction with metal sheet siding. Arena is metal roof, horse barn and leanto are asphalt shingle.

What value should I place on the arena and horse barn? Any estimates on what it would cost to replace?

Do you insure your outbuildings for replacement value?

I am suffering sticker shock on my insurance bid. $2600/year for these values: $375k for the house, $150k for the horse barn and $75k for the arena, and $500k liability insurance for horse boarding risks.

 

[dmccarty]

What is the appraised value on the house, barn and arena?

If there is a Farm Bureau in Michigan, give them a call for a quote.

I would expect/guess that the premium is high because of the horse riding and boarding? Does the insurance cover the place as a business and open to the public?

Later,
Dan

 

[kootch88]

I have questions about getting insurance that is affordable.

We are buying a 19 acre horse farm in Mid-Michigan. House is 3700 sq. ft. (2 family) ranch built in the 1980's. Horse barn is 30x50 gambrel roof style with stalls, aisleway and hayloft above, with an 18'x40 leanto for workshop. There is an 80x50 indoor riding arena attached to the horse barn. The barns are all pole construction with metal sheet siding. Arena is metal roof, horse barn and leanto are asphalt shingle.

What value should I place on the arena and horse barn? Any estimates on what it would cost to replace?

Do you insure your outbuildings for replacement value?

I am suffering sticker shock on my insurance bid. $2600/year for these values: $375k for the house, $150k for the horse barn and $75k for the arena, and $500k liability insurance for horse boarding risks.

Appraised value has no bearing on insured value. Your insurance agent should be able to do a rebuild calculation for you, but it is up to you as to how much you insure it for as long as you meet the base rebuild vaalue. Out buildings are insurable as dweliing extensions on your policy. You should see it as a minimum of 10% of the rebuild of your home. You can not go lower, but you can go higher.

In Maine, when I do these calculations, I always take the most expensive outbuilding and do the calculation. That way, if there was a smaller outbuilding there would be ample coverage as long as all did not burn or get blown down at the same time. I also explain this to the customer so there are no surprises if there is a claim down the road. We do not have severe weather events like in Texas or other parts of the country, so it is a calculated risk worth taking in many cases. It may not be where you are.

Hope this helps.

 

[GPintheMitten]

We don't have an appraisal. We feel the value exceeds what we are paying for it, and we are putting 2/3 the value down, so the mortgage company didn't require an appraisal.

The insurance company is bidding replacement value on the house and values that conservatively at $375,000. I think that is fine.

My questions are really about the barns. Since I posted, my wife looked up what the seller paid for the 50x80 arena 2 years ago. It was $50,000. So I can lower my coverage on that, from the bid of $75,000.

Now as to the horse barn. What would it cost to build a 30x50 horse barn with a 10 foot aisleway and 10' stalls, with a gambrel roof and hay storage over the entire building and an 18' leanto on one side? This building is 26 years old, not a fancy Morton building. I think my insurance agent is listing the value way to high at $150,000.

The liability insurance for horse boarding is $500,000 and the premium is $478 a year. We might eliminate this for now because we have no boarders yet and so no risk and no income. I think we will be able to add this next spring when we advertise for boarders. (We have to wait for next season's hay crop to be able to support boarders.)

 

[GPintheMitten]

My agent has done the building calculations for the house, no problem -- basically $100/sq. ft.

But he is not familiar with calculations for pole building construction. He is an independent agent and is working with a number of companies, but apparently, all lacking in a pole building construction model for building costs.

I guess I can just set the value limit for the outbuildings myself. But I'm not uptodate with what it would cost to replace the horse stall barn. As a kicker, the arena and the horse barn are connected -- they share a gable end.
A fire in one will likely involve both.

 

[kootch88]

Check your PM, maybe I can help you out.

John

 

[GPintheMitten]

Check your PM, maybe I can help you out.

John

Thanks John.

Jerry

 

[Ken45101]

I guessed on the older barns based on what it would cost to replace them with a suitable replacement. You might also make sure that it covers debris removal.

But also be very very careful with the ethics of the company you choose. We were recently involved in an auto accident where the other person was at fault. We were first damaged by the recklessness of the other driver and now are being raped by her insurance company....which turns out to be the same rats that we have for our farm insurance. I will soon be searching for an honest insurance company for our farm policy.

 

[riptides]

Farm policies are a real eye-opening event when it comes to insurance. Farm Bureau has their act together in my state for my farm. The other major industry players cannot compete.

It is expensive, but it is insurance. I fall asleep at night, not thinking too much about my policy.

As my agent once said "the old barns are white elephants".

 

[kootch88]

Most farm policies are nearly identical, especially where property is concerned. What one person gets for price may not be the same for another because insurance companies use credit profiling in almost all states. Just because you have an 800 credit score does not mean you will be in the best structure of their matrix. So Joe and Mike may have identical properties but will in all probability have different rates.

Homeowner policies, which is what the OP needs at this point until he actually decides if he will or will not run an actual farm function the same way as far as rates. What is different is how the agent handles the policyholder, his knowledge and yes, his integrity. Agents experienced in farms and rural properties will have no problem in helping you as long as they have the tools to do their job, which in the case of pole barns and other unique structures is not always the case. Use e-mail and keep them handy in a file that shows the date of the posting and the complete thread so that if there is an issue of coverage on the policy, the agent may be liable under his E&O policy. The thread means both sides of the email from sender and receiver. If an agent seems like he doesn't know what he is doing, he probably doesn't. There are lousy agents and good agents out there, just like mechanics and paperboys.