Is Your Eichler Underinsured?

Policy coverage needs to keep pace with rising costs of construction in your locale
Fridays on the Homefront
Many Eichler owners have sought home insurance on the assumption that the cost of rebuilding an Eichler (like the one above) would mean coverage in the area of $300 per square foot. Well, not anymore. Rising construction costs in recent years have some Eichler owners wondering if $600 is closer to reality, at least in the Bay Area's Peninsula/South Bay corridor. What's in your policy? Photo: David Toerge
Fridays on the Homefront
Fridays on the Homefront
This San Jose Eichler was lost to fire in 2014, but insurance brought it back in a rebuild. Photos: Al Boyden
Fridays on the Homefront
Sunil Parekh of AAA Insurance (left), Craig Smollen of Smollen the Builder (right).

Keeping your home insurance coverage up to date is one of the most critical elements of responsible homeownership, right up there with paying the mortgage and making sure the roof doesn't leak.

Figuring out the prudent amount of insurance to carry is far from simple, however. It's a figure you don't want to get wrong—especially on the low end.

"There's no set answer," said Sunil Parekh, one of two professionals we consulted about the topic. Both, however, offered several guidelines to answering this crucial question.

Parekh is a graduate of Cornell University who has been an insurance agent with AAA Insurance for nine years, currently at the Mountain View office.

"Your agent should make sure that you're not underinsured," he said firmly. "Sometimes people pay a little extra just to be overinsured."

The latter might seem like a safe strategy for a question that has no easy answer, but Parekh assures that it is not the panacea it might appear.

"Don't expect that if you're overinsuring, it will help you," Parekh warned of how insurers handle a claim. "No one's going to make it easy or write a blank check."

"It's not based on the value of the home, it's the cost to rebuild," the agent explained. Because of differing construction costs in different locales, he said, "It will vary in different parts of…Northern California."

Craig Smollen, owner of Marin-based general contracting firm Smollen the Builder, said the key insurance term is "replace in kind." In the case of Eichlers, one of his specialties, that replacement cost has naturally changed since the mid-century.

"We have a lot more responsibilities to make sure of than when they [the Eichlers] were built," he said of state and local code requirements. Nonetheless, Smollen said that in the majority of insurance claims, "We can rebuild most Eichlers."

Ultimately, Parekh said, when calculating the amount of insurance to carry, "It'll all end up boiling down to cost per square foot."