My current package insures my home for the amount of the purchase price, which seems high. Should I insure the structure and property for the amount it would cost to rebuild, rather than the full purchase price?
Three answers:
2006-01-30 07:02:26 UTC
Do you have a mortgage? If you do, the mortgage company will want to see the coverage on the dwell be at least as high as the mortgage balance.
Otherwise I would talk to a local agent that can calculate the replacement cost on your house. They will ask you questions like - What is the total square feet in the house? What type of building materials were used?
OPM
2006-01-30 14:50:37 UTC
I find it surprising that it covers a purchase price when the rebuild price is lower. You must have a dwelling fire policy. Homeowner's policies usually cover replacement cost, not purchase cost. I am in the opposite boat. The replacement cost of my home is twice the purchase cost. I bought my home during a local housing price depression from an estate.
markmywordz
2006-01-31 22:09:24 UTC
You don't need to insure the dirt that your home sits on. Using the purchase price means you are including the cost of the dirt, which you don't need to insure. So, determine exactly how much it will cost to rebuild your home to the way it is today and attempt to factor in some sort of guarantee in case of 'building material' price escalation and insure for that much. Some insurers offer 'guaranteed replacement cost' coverage, but it is important to keep it updated to take into account increased valuation.
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