Chia Pet wrote:

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???

Yes, pay for an appraisal, which includes a price for rebuilding. Send
this to the insurance company and have them increase the insured value
of the house.