Chia Pet wrote:
"George E. Cawthon" wrote in message
...
Ron Hardin wrote:
You don't have to replace the real estate; so that part of the cost
doesn't need additional insurance.
If your house itself actually has risen in replacement cost, insurance
companies are happy to insure it for more; the more they insure, the
happier they are.
They just don't want to insure it for more than it's worth, because
it encounters a moral hazard, namely people making money by setting
fire to their house; which raises the odds against them enough for them
to notice on the bottom line. They want to be sure you can sell it
for more than you're insuring it for, so you sell rather than burning.
--
Ron Hardin
On the internet, nobody knows you're a jerk.
That argument is a non-starter. First they won't give you
more money that it will cost to replace the house, no matter
what you insured it for.
But there's a huge rub. Replacing my house, according to the insurance
company, would cost about $350k on a home with a market value of $50-125k
(depending how you count it). That's because of building costs and square
footage.
So, then the problem. They fight the claim. Theoretically, I could rebuild
and then claim the money in court and win if I had a replacement policy (if
there is no weasel clause). But, if I don't have the money to build first (I
don't), then they offer some lowball comparable price for a neighborhood
purchase and threaten to withold everything and initiate an arson
investigation. I tell them I just want my house rebuilt and they yell FRAUD!
Why should I get a brand-new home to replace the old ragged one? I can take
their paltry settlement or hire a lawyer and litigate it for years.
Suddenly, the policy isn't really insurance. It's a contract to get a ton of
crap if I ever need to collect on it. That's the reality of much of the
insurance business.
If I really could get what I bargained for, I'd buy in a second. I'd say
here's the several hundred more, give me the gold plated coverage.
Second, they would be very happy
if you burned it down yourself and you will most likely be
caught and they won't have to pay anything. Third, burning
for profit is rather risky and likely to lead you right to
the pen.
Finally, although insuring a house or building for more than
it is worth won't end up with a profit if it burns, you can
insure a persons life for any amount you want, but you don't
see people dying by the droves as others kill them off to
get the life insurance. Maybe it's because it is MURDER.
And, the insurance company doesn't give a damn about moral
hazards, they just care about profits so that's why they
don't pay anything that results from illegal activities of
policy holders.
And that's why they don't pay without a fight too. And the more ammunition
they have, the less chance the court will find bad faith if they fight, and
the more likely it will be in litigation instead of in the form of a check
at crunch time.
I haven't a clue what you are talking about. Replacement is
replacement, There is no way you can buy/sell a home for
$125k and need $350k to replace it. Maybe what you are
trying to replace is an old piece of crap with a modern full
frills house. For instance if you house is a 3 bedroom 1
bath, you sure won't get the money to replace it with a 5
bedroom 3 bath house. Only in a very few highly specialized
cases would the difference in cost and replacement be a
factor of 3, and in those case your house would probably be
condemended as unlivable.
They don't "pay without a fight" unless they have some proof
of illegal action. Otherwise, they are likely to end up
paying 3-4 times as much in fines and other court costs.