Does property value affect home insurance?

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PostPosted: Sat Apr 21, 2012 10:12 am   Post subject: Does property value affect home insurance?  

Can you please let me know, how dropping property values would affect my home insurance?

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hannah gomez
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PostPosted: Sat Apr 21, 2012 1:39 pm   Post subject:   

It would not. Your premium is based on the limits of the policy.

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PostPosted: Sat Apr 21, 2012 10:40 pm   Post subject:   

tcope's answer is incomplete.



Not only is the cost of homeowner's insurance based in part on the coverage limits, all of the various limits are based on the REPLACEMENT COST of the property, not its market value.



Your property may have gone down as much as 40% in market value, but its replacement cost is likely to have gone up due to the rising cost of labor and materials. People often do not appreciate this fact.



Declining property values can have an effect on your property taxes, but that has nothing to do with the replacement cost of the dwelling and its contents and appurtenant structures.



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PostPosted: Thu Apr 26, 2012 12:23 pm   Post subject:   

MaxHerr is correct with his answer. I do some replacement cost appraisals on properties here in Florida and everyone says the same thing, how can you say my house needs to be insured for $1,000,000 when I can buy the house across the street for $500k? As MaxHerr stated it is based on the actual cost to rebuild your house. In the unfortunate event of a fire they will not buy you a similar house they will pay you to demo the damaged property and rebuild it to the same standards as you had.



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PostPosted: Fri Apr 27, 2012 8:00 am   Post subject:   

If you need a detailed answer, can go to the local insurance department inquiry, they will give you the correct answers.

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