Re: homeowners insurance
04-09-2012 02:18 PM
I don't understand why the potential house replacement costs are anticipated to be more than you are paying right now for the house and land. Isn't the land the house is built on worth something? Unless you are building on a cliff that is in risk of sliding into the ocean (and thus, having the land completely disappear), presumably the land will still be there if something horrible happens to your house. The insurance broker I worked with used to be an insurance adjuster, and he could tell me approx cost per square foot what it would take to rebuild our home now. I can tell you that this was quite a bit less than the mortage. Of course, I live in an expensive city in California where land is expensive.
Note that when I first contacted an insurance company (the one my car insurance is with), I spoke to some young girl who clearly didn't have an idea about replacement costs. She simply quoted me ~$100K more than our mortgage, and suggested that "this amount should do you fine". After working with the broker, I realized that it would be odd (in my case) to have the replacement value be the same or higher than the cost of the house and land.