Posted by PJM/MI on 7/13/06 5:10pm
Msg #133050

Cancellations due to insurance

Hey All,
I had TWO cancellations yesterday due to the insurance companies wouldn't insure the property for the appraised value. Any else had this problem? This is a new one on me.

Reply by NCLisa on 7/13/06 5:25pm
Msg #133053

The appraisal includes the land and the structure. If there is a fire, the land is still there. Insurance should be guaranteed replacement for the structure, not for the appraised value of the property.

Reply by Laura Upton on 7/13/06 5:59pm
Msg #133060

As a licensed insurance agent, i am qualified to answer this question.

Replacement cost value is different than an appraised value of the house. NC Lisa is right, the insurance is for the structure (s) on the property. Land is not insurable.

So, that being said, you have 2.5 acres of waterfront property with waterrights, and its appraised for $500k; and the camp built on it can be replaced for $100k; then the insurance will be for replacement cost value of the house/camp; and not for the appraised / resale/ real estate/ tax assessment value. Mortgagees want the insurance to cover the loan in most cases, so if the house is lost, they get their money. problem with that is, the replacement cost of the home sometimes is lower than the loan amount; and it causes problems with financing.

Hope i didnt confuse anyone. laura

Reply by hcampersFL on 7/14/06 9:21am
Msg #133143

Laura you make perfect sense.

Thanks for breaking it down that way. Very easy to understand and not confusing at all. Thanks for posting.
b.

Reply by Laura Upton on 7/14/06 9:10pm
Msg #133306

Re: Laura you make perfect sense.

thanks. did not want to confuse anyone....and sometimes my 'insurance lingo' gets ahead of me. giggle. have a great weekend! laura

Reply by ReneeK_MI on 7/15/06 7:15am
Msg #133322

Question for you, Laura

I have never understood this, perhaps you can explain?

If mtgee will accept "Guaranteed Replacement" to cover the mtg amount, and if the home burns to the ground - the policy is STILL only going to cover rebuilding cost, then isn't that kind of ... stupid?! I mean, in their eyes and using your scenario of the $500k camping property, they would accept EITHER a) Guaranteed Replacement policy, OR b) $500k policy coverage; BUT Guaranteed policy is really only going to pay out $100k, but they'd never accept a $100k policy. Right?

I never could get this figured out ... can you shed some light?