My insurance company estimated the replacement cost for my home at over $100,000 more than the appraised value (which includes the value of the land). Should I be concerned about that? Is it advantageous to have the insured value greater than the actual value?
home insurance is actually very flexible. I don’t understand all the details of my home policy, but my homeowners insurance agent is always a phone call away. Try contacting your agent or a homeowners agent in your town. http://www.easyhomeinsuranceguide.com They should be able to help you.
Tags: home insurance, Home Policy, homeowners insurance, insurance, Insurance Agent, Insurance Company, Replacement Cost, Replacement Value
""Is it advantageous to have the insured value greater than the actual value?""
Yes, It is in your interest to insure your home for replacement, Most insurance companies write the policy that way,, The reasoning is, replacement value is factoring in actual cost to rebuild the home in the future should you experience a loss, rather than the actual cost of the home,
When talking about car insurance, Auto insurance policies are actual vehicle value policies, not a replacement value policy,
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The home needs to be insured for the cost to have a general contractor come in and rebuild your house from the ground up with the exact same finishes.
This value is completely different from what the house would sell for.
Currently, house prices have dropped. But the cost of lumber, shingles, bricks….etc have continued to go up.
It is entirely possible that it would cost more to build your house than what it would sell for on the open market.
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Insurance Adjuster
OK, you’re comparing apples and oranges. Replacement, is cost to REBUILD the home. Appraisal, is what you can SELL it for.
In many parts of the country, houses are selling for WAY under the cost to rebuild.
Some insurance companies won’t write the homeowners policy if the discrepancy is too big.
But it’s not "insured value/actual value". It’s "cost to repair/rebuild vs. sale price". You can buy a 3,000 square foot 100 year old home in many parts of the country, for under $50,000. You couldn’t rebuild it for five times that.
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Home insurance is actually very flexible. I don’t understand all the details of my home policy, but my homeowners insurance agent is always a phone call away. Try contacting your agent or a homeowners agent in your town. http://www.easyhomeinsuranceguide.com They should be able to help you.
References :