"Chia Pet" Chia wrote in message
...
I've been watching real estate around me with absolute astonishment. After
being evicted from our apartment last December because the landlord sold
the
house, we bought a home for $51k and insured it for $75. We did alot of
work
on it to make it nice. But regardless of that, real estate prices have
gone
crazy and we couldn't replace our home with less than $100-125k now, less
than a year later.

The other night I had a nightmare that my house burnt down and, even after
hopefully convincing the insurance company we deserve $75k, we had $75k
and
were hopelessly unable to buy a home.

The good news is I woke up and the house is fine and near a fire hydrant
and
fire house. The bad news is that really is my insurance situation. The
purchase price is the insurance company's weapon against a higher claim
(the
purchase price was abnormally low even then). But replacement even with a
$25k increase would definitely be impossible now.

Is there a way out of this nightmare???

Yeah- Make sure your policy has enough coverage to replace your house in the
event it burns down or is otherwise totally destroyed by an insured event.
Keep in mind that part of the value of your house is in the land, which
typically doesn't burn down with the house.
How much of your home's value is the land? The difference between the land
value and the total value is the value of the structure. Make sure you have
replacement cost on at least that much, and you should have no problems in
the unlikely event your house is totalled in a fire. Make sure the coverage
on your policy is indexed for inflation, too.
Dave