"andy asberry" wrote in message
...
On Tue, 11 Nov 2003 12:49:05 GMT, wrote:

On Tue, 11 Nov 2003 06:24:35 GMT, "Chia Pet" Chia
wrote:

Ok, the thing that worries me is this. I insure for replacement value.
The
insurance company says " replacement value is the cost to buy a similar
property - market value - the price you paid, perhaps with an inflation
adjustment. Certainly not the price of those other more expensive
properties
which, based on what you paid, your property surely isn't."

You can buy $1 million insurance on a $100k property. If it burns, you
just
get $100k.

Actually, you can't.


So how to assure convergence between reality and insurance adjustors?


Everything you said above is incorrect. You can insure the house for
replacement
cost. That means if it burns down, they build you a similar house on the
same
piece of dirt. Not replacement "value" to buy a different house on a
different
piece of dirt - THE COST TO REPLACE BY REBUILDING. Home insurance is not
the
same as car insurance. You need to do a little homework. My insurance not
only
covers the actual replacement cost, but additionally provides the same
amount
for "loss of use" protection. That pays my rent and other expenses during
the
time my house is unavailable to live in.

BB

The confusion seems to be replacement VALUE (market value) and
replacement COST (cost to rebuild). Some companies will not just write
a check for the replacement cost. They require that you actually
rebuild.


Exactly. If you choose not to rebuild, you will most likely receive Actual
Cash Value: Cost to rebuild house today - depreciation = money you get less
deductible. For example:

House built in 1953 burns down. Owner chooses not to rebuild. Cost of
rebuild is $130,000(which is the amount the home was insured for) - 50 years
of depreciation. Owner may expect roughly a little more than half for the
dwelling. He can also expect to pay to have the home torn down and hauled
away himself, plus paying all the fees, inspections, tests and whatnot to
make sure the property is safe to rebuild on, etc. Items that the insurance
company would have picked up had the owner wanted the home rebuilt - to a
point.

This is just in rough-speaking terms, your insurance policy may vary...

My 2c,

Matty