Is $225,000 insurance too much for this house?
My husband and I are buying a short sale house for $162,000. The property appraiser's website has the house appraised at about $143,000 & total appraisal at about $180,000. It's a brick home w/ vinyl trim. 4 bedrooms, 2 baths. Maple cabinets w/ Corian counter tops. Carpet/Tile flooring. There is about 1700 sq ft living space & about 2600 total sq ft. The home was purchased new in 2007 by the seller for $219,000. The bank says the insurance coverage must be no less than our purchase price of $162,000, but the insurance company recommends more coverage due to not being able to rebuild for the price of $162,000. Would I be overpaying at $225,000??
Asked By: Misty - 6/11/2009
Best Answer - Chosen by Asker
From your description of the house, I wouldn't be shocked if $225,000 was too low for that house. I copied and pasted the information below from the Nationwide web site. It should give you some insight as to why insurance companies want to insure your house for more than you think you should... More
Answered By: Joey M - 6/11/2009
Additional Answers (5)
Answered By: zeuz - 6/11/2009
You might look into a "replacement cost" rider on your homeowners policy. That way you can have less coverage but they guarantee to pay whatever it costs to rebuild to previous standards. It's usually a lot cheaper than being over insured.
Answered By: Beverly S - 6/11/2009
That's about normal. I know it's totally weird to have insurance coverage over the appraisal value. But those are separate. The cost to rebuild would be higher.
Answered By: Veritas et Aequitas () - 6/11/2009
OK, are you insuring the house for MARKET (aka, appraisal) value, for PURCHASE value, for LOAN value, or REPLACEMENT value... More
Answered By: mbrcatz - 6/11/2009
If you believe that you can replace your total living area for under 96 dollars a square foot then go ahead. The insurance compnay is going to have an inspector come out and lok anyway. If you under insure and have a loss they are only going to pay 80% of it. Go witht he 225000 you will be much better off.
Answered By: dirtyinjersey - 6/11/2009
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