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 No Tune in a Bucket
Posts: 2935
   
Location: Texas | I have questions about homeowners insurance. Can anyone help?
Spoke with our insurance rep this morning. He said that we needed to increase the policy for the replacement value of our house. Their new appraisal value of the house increased from 225K to 248K. I said what if we were ok with the 225K replacement value and wanted to keep it where it is? He said the insurance co. required that the house be 100% insured and if there was a claim that they might only pay a % of the 225K. The house is paid for if that makes a difference.
Is this right? I hate insurance. Can't live without it, but jeez. |
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  Fact Checker
Posts: 16575
 
Location: Displaced Iowegian | I can only tell you what State Farm agent told me.....they wanted to increase my premium to increase the replacement value up by 10 or 15K (can't remember). I told them "no" and that was OK....but I would only get that "set amount" and NOT replacement value should something happen, which was fine by me. |
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 The Bling Princess
Posts: 3411
Location: North Dakota | Yes, that is true. It's called a coinsurance penalty and in the event of a partial loss, if the house isn't insured to full replacement cost value, they can slap a penalty on you. If you have a full loss then they pay you the value you have insured, on your house, minus the deductible if you have one.
Fair market value and replacement cost have nothing to do with one another.
ETA: If you don't want to insure to 100% RC value see if they'll insure you at 90% coinsurance. Then the limit that your at wouldn't have to be changed:)
Edited by WYOTurn-n-Burn 2014-04-04 1:13 PM
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Veteran
Posts: 131
Location: Georgia | If you are in GA, AL, TN, SC, NC, MD or VA give us a call and we will be glad to review and provide you an explanation.
www.FarmInsuranceMan.com
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Veteran
Posts: 276
| The only thing you have to be careful with by not insuring to 100% replacement cost of your home is that people sometimes only think about a "total loss" situation, thinking that it is okay if they don't receive that much because they could purchase another home or rebuild for less than that, but when you look at partial claims, such as replacement or repairs to a roof, for example, then you would only receive that percentage (for coinsurance) or actual cash value (after figuring depreciation) for the roof repair or replacement. |
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No Tune in a Bucket
Posts: 2935
Location: Texas | Ok, I guess I was only thinking about total loss. Thanks everyone for your input. |
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Folks on-line