On Jan 31, 8:36 pm, "
wrote:
Just wanted to bounce something off the group.

I have recently received a quote from Farmers insurance for home-
owners. They put the price at rebuilding the home at about $181,000
but the tax roles list my house at $100,000. Should my house burn to
the ground, would it indeed cost $181,000 to rebuild or is Farmers
just padding the coverage?

Other responses mostly pretty good -- only one point I didn't see
mentioned. There's a thing about "underinsured" that can bite you if
you decide to insure the property for less than (typically) 90% of
replacement value. This is a clause that is there precisely to
prevent a deliberate underevaluation to obtain lower premiums,
typically to satisfy mortgagee's requirements. Be certain to have a
realistic replacement evaluation and if not comfortable with the
insurance company's estimate, get a ballpark estimate from other
sources for comparison. You can also get what is known as an
"AV" (agreed value) policy where the contract states the stated value
is the "agreed value" and there will be no question on paying up to
the limit in case of loss.

The under-insured clause could be a bite in the case of the suggested
"co-insured" plan unless that were made clear and agreed to by the
insurance carrier in the policy at the time of the underwriting. In
order for them to agree, you would probably have to place the funds in
an escrow account or otherwise encumber other funds in some manner.
It's fairly common for larger businesses to "self-insure" some risks,
but far less so for individuals to do so (on a formally planned basis,
anyway).