How much do you insure your Home for?

the appraised value or more, im confused

Re: How much do you insure your Home for?

Ours is insured for the cost to rebuild the house. That is usually higher than the appraised value. The thinking is, if your house burns down, you can rebuild it again where it is.

Re: How much do you insure your Home for?

Re: How much do you insure your Home for?

I believe we're insured for the appraised amt, but I'm not absolutely certain.

Either way, we're with State Farm and they came in, did their own inspection with picture taking of the house.

Re: How much do you insure your Home for?

mine is insured for less than the appraised but more than our mortgage/what we paid. i was just on the phone w/my agent yesterday because we are getting dropped & he was explaining how they calculate it, it don't make sense to me but he said something about adding 6% a year

Re: How much do you insure your Home for?

Posted by Meaghan729

Posted by GoldenRod

Ours is insured for the cost to rebuild the house. That is usually higher than the appraised value. The thinking is, if your house burns down, you can rebuild it again where it is.

can you explain how it would cost more to rebuild your house than it appraised for?

I would think it would be less because your appraisal also includes land.

Message edited 4/5/2007 7:25:13 AM.

Re: How much do you insure your Home for?

Posted by GoldenRod

Posted by Meaghan729

Posted by GoldenRod

Ours is insured for the cost to rebuild the house. That is usually higher than the appraised value. The thinking is, if your house burns down, you can rebuild it again where it is.

can you explain how it would cost more to rebuild your house than it appraised for?

I would think it would be less because your appraisal also includes land.

Rebuilding includes labor, and brand new stuff. My current house is already built, has "used" appliances, "old" siding, framing, flooring, etc, etc...

Re: How much do you insure your Home for?

Ours is insured for the rebuild amount, which is less than the appraisal amount. This may have something to do with where you live. We are on LI and the land is valued at $60 or 70K with the rebuild of the house at $240K...so our insurance only covers the $240K.

Re: How much do you insure your Home for?

I shopped around and got the same explanation from each insurance company. I believe the rule is to insure for approximately 80% of what you pay for the house. The full price of the house includes the value of the land and as that will still remain in the case the house is destroyed, that value is deducted. (i.e. if you pay $400K for the house, it should be insured for $320K).

Re: How much do you insure your Home for?

I copied and paste from a previous thread asking this: Hope this helps!

You are suppose to insure it for the rebuilding value of the home.
Banks, esp on a new purchase home...can require to take above and beyond the rebuilding value.

The market value, Building + Land = Value. Therfore, asking to cover that amount is not realistic since Insurance is only coverage on dwelling the rebuilding value/amt. Insuring it for mortgage amt is OVER insuring the home and if there is a loss, you would never see that whole amount.

Now each homeowners policy offers additional coverage under an endorsement, about 20% (some more).

EX: So if your mortgage amt is say $250k.

We would insure it for $209k plus the 20% (additional amt that is sitting in a reserve if ever needed) to offer $250k coverage therefore not having you to pay this premium of 250k coverage. Esp in cases where the dwelling dosent need to be that high.

The coverage that is determined is the replacement cost value and it is an "estimated" amt done by asking questions re Home and territory etc.

Its never guaranteed so that is why 20% additional is offered as an endorsement.
No company offers a guaranteed replacement cost.

Every yr, the policy should increase due to inflation and anything done to the house should be a flag to notify your insurance company to reasses your home and make sure your house is covered properly.

Re: How much do you insure your Home for?

we only pay for rebuilding - not the full price (that included the land)

it's actually only about half of what we paid!


i guess if you don't want to rebuild - you could just sell the land and take the insurance money

Re: How much do you insure your Home for?

Posted by Meaghan729

Posted by GoldenRod

Posted by Meaghan729

Posted by GoldenRod

Ours is insured for the cost to rebuild the house. That is usually higher than the appraised value. The thinking is, if your house burns down, you can rebuild it again where it is.

can you explain how it would cost more to rebuild your house than it appraised for?

I would think it would be less because your appraisal also includes land.

Rebuilding includes labor, and brand new stuff. My current house is already built, has "used" appliances, "old" siding, framing, flooring, etc, etc...

I see what you mean, but I doubt that will be more than what your house appraised for. Its actually not that expensive to build a house (look at new construction in NC that cost $200K). We pay more because of the land value.

but it is better to be safe than sorry!

Re: How much do you insure your Home for?

i'm insured for the rebuild costs of my house $260K. the appraised value iincluded the land.

Re: How much do you insure your Home for?

Thanks for the information. I was wondering about this. Initially, the amount I was given was about 1/3 of the price of our house. Then the agent gave me a higher figure, which sounds like it's in line with what people are suggesting.

I was thinking you insured the full value of the property and the house.

Re: How much do you insure your Home for?

I believe, if I remember correctly, we are insured for the price my agent came up with that it would be to rebuild it exactly the way it is now (well square footage wise...ie: I have a 3 br ranch...if it burnt down it's insured so we could rebuild another house that is about the same size and not pay extra if we didn't want to) PLUS we pay extra for us to stay in a hotel while this would be going on (something like that) because when you think about it, if your house burnt down, if you don't live near family/friends or anyone that can take you in, where would you stay?

However I can't remember if it's more or less than what the house is appriased for. We bought the house for $1K less then what it appraised for.