You may be interested n this little true story.

A man has a house, bought for $155k on a mortgage.

In difficult times, he cancels his insurance policy on it. And
remorttgages it cheaper. No one asks to see a valid isurance certificate.

Times improve, and the wife is aked to re-insure it.

Not understanding that the house is in fact completely uninsured, the
wife gets a contents plicy on it.

The house burns down to a shell.

Ther is a huge legal kerfuffle, with tehman claiming that if the
mortgage company have by dnt of having crap paperwork, not checked the
validity of isnurance, its their problem.

However, finally the shell and plot is auctioned for £150k, and all is
cleared up.

The cost of re building the shell is about we estimate £100k, and the
new house goes for £300k.

One thinks that the ownre old hae, in fact, simply auctioned the
plot/shell himself,except the mortgage ompany wouldn't have let him.

The mortgage company has lien over any property it lends against: Their
concerns are purely and simply to have insured the difference between a
worst case accident and the cost of getting their money back. IYSWM.

You, as a property owner, faced with a wholly owned burned out shell
etc, may do what you like up to and including abandoning it and moving
on. However its hard to establish what the claim value should be if you
do this. Whereas if its rebuilt with reasonable quotes presented, they
can agree to pay the rebuild cost.

In the case of a mortgaged property, you are not free to act: The
mortgage company will more or less insist that you either contuinue to
pay mortgage on the full value of the loan,or repossess the house.

The only case in which you might care to insure over the rebuild value,
is if there is a hance that teh whole site might become uninhabitable
due to e.g. falling in teh sea, or becoming contaminated with
radioactive waste. Most insurance companies won't touch that sort of
policy anyway.

Note that if teh estimates for rebuild exceed the insured for value, you
won;t even get teh full insured value out of te insurance company: You
can lawfully be adjusted down to the fraction of the insured value
represented by the insured value versus the rebuild cost.
i.e if your house cost 500k to rebuild, and its insured for 400k, you
may only get 4/5 of 400k. or 320k.

I've come aross that gotcha in contents insurance. Adjuster started
saying that 'my furbniture was worh far more than insured for, therefore
I as unde insured, therefoare he would only pay out 50% of te value of
the TV etc stolen, until I made a point that none of the furniture was
bought new, and was at best reclaimable from skips and junkyards at a
couple if grand. That shut him up.

Do take insurance seriously. IF you e.g. have a flood, and they consider
the house is under insured, you may not get full returns on e.g. flood
damage een if te sum you claim is far far less than the 'insured value'.

Read the fine print, and any issues get a letter in writing clarifying
their policy. hat you an wave in their faces if you ever need to. AND
make sure its not in a cardboard box in teh attic. Fireproof safe.

Mind you, the letters to and from te company in teh case of the real
example I quoted must have got burnt, because thats whta teh man
claimed, that he had done X and Y, and it wasn't his fault the the
mortgage company had lost their copies when they got taken over etc etc