I’ve been doing an in-depth review of our homeowner’s insurance the past few weeks and when you say “[California] coverage is designed to pay for a burned down house in Des Moines” you are exactly right. I find we are modestly underinsured if a single disaster hits, i.e., our house burns down by itself. But we are grossly underinsured if a major disaster like Santa Rosa or an earthquake hits and materials prices shoot up 50% to 100% and labor is scarce as hen’s teeth. The broker I’m working with says lots of people in and around Santa Rosa are discovering this when it’s too late. There’s a special coverage item on our policy to specifically pay the costs of rebuilding compliant to today’s building codes. Their “replacement cost” analysis includes a specific line to cover the cost of clearing away the debris and it wasn’t very much, probably at the low end of your estimate. I think your advice is sound.
In this particular case, from 20,000 feet and with the benefit of hindsight, you can see how this happens, and it is instructive. My brother bought the vineyard 5 years ago, from a woman whose husband passed away but in any event had probably bot insurance from one company maybe even one agent for 25 years. Maybe 40 years.
From the start of that saga, to the present, that particular area had morphed from “out in the boonies” to Gaia-worshipping ecological frenzy zone with the recognition that the entire area drains into the Russian River, also considered an eco-treasure. (it *is* nice up there)
Point being, the oil you pulled out of your tractor and dumped on the ground in 1978 is a crime against humanity in 2017. Now, you and your forebears may have stopped dumping your oil in 1965 but if FEMA finds it, today, under these conditions, you’re gonna have a problem on your hands that will destroy you.
I don’t know how applicable it would be on an ordinary house in the suburbs. But “out in the boonies” has evolved into a “nature preserve” and the enviro standards have gotten super strict. Just as one portion of an example, you could be on the hook for $100K just in lab reports and testing in a worst case scenario. I know of one case my bro worked on where the net value of a piece of property was potentially reduced from $2 million to about $150K because of toxics found and the costs for remediation that ultimately had to be performed. That’s a big hit.
I think the lesson is, it’s crazy to underinsure, because it’s generally a pretty cheap bet, few hundred bucks a year.