Question : Can a home insurance company increase the amount of insurance on your house without your request?
Of course when the amount of insurance in increased, the insurance premium also increases. I have only $125,000 left on the mortgage and insurance company has increased the insurance to cover a value of $305,000. Real estate value of the home is $450,000. My credit rating is excellent and I have not had any insurance claims
- asked by gentlevet
All Answers:
Answer #1
Yes, it can be done.
- answered by House Mouse
Answer #2
Yes, they can. If they inspect your property andfind you are under insured they have the right toincrease your limit to the true replacement costof the building.Also, many companies build in aninflation guard. So, when you renew you will seea higher premium, but this is because the coveragehas increased, as well.btw, there is littlecorrelation between market value and replacementcost.
- answered by van_at_lincoln
Answer #3
You should be glad that they have done this foryou. You should have your property insured forits full value. The $125,000 is what theinsurance will pay the bank in the event thatsomething happen. With the change the insurancewill still pay the bank and the balance shall bepaid to you. This $180,000 would let you rebuildthe house without having to start over again.Iknow the payments are hard to take, but the costof rent is worse.
- answered by whatevit
Answer #4
Yes, especially if your policy is "replacementvalue" since the cost to replace your home hasgone up along with both the overall housing marketand the cost of raw materials/labor to rebuild. Don't forget your assets in the house (i.e.furniture, clothing valuebles - these have valuein your policy as well)Yes, you may owe only $125Kon the house, but what would happen if your homewas destroyed (by a covered loss)? Would you onlywant to pay off the mortgage? I think not, Iwould guess that you would want to rebuild andre-stock furniture/belongings.Since your'real-esate' value is so far above your insuredvalue, you may actually be under insured!
- answered by NHMike
Answer #5
This is probably to cover you in case of a loss(sounds prudent to me)If you were to have a fire,you would want to have the house rebuilt and itwould cost more than the $125K mortgage. Usuallyyou insure the value of the house (minus the landvalue) and 2/3 of the value for contents.You canalways increase the deductible if your concern islower premiums but in the event of a fire orbreak-in you would be responsible to pay the first(example: $500 instead of the first $250HomeValues are increasing (along with the salaries ofbuilders or repairs) so the higher cost may beprudent. Possibly the insurance co. should havegiven you advanced notice but on the other side ofthe coin if you had a fire and it would cost $450Kto rebuild and found out you were only going toreceive $350K you'd probably be more upset withyour insurer.Shop around but also compare eachcompanies level of service or if anyone has everhad a problem with a claim. Sometimes that's moreimporatnt then the added cost
- answered by Johnny
Answer #6
Yes. Part of the policy condition is that youinsure the home to either 80%, 90%, or 100% of thereplacement value, on a standard HO3 Homeownersform. So, if you want the type of policy that isNOT a replacement policy, you'll have to get awhole different kind of policy. Of course, a FLATRATE policy costs about ten times as much as astandard policy. Real estate value, or marketvalue, has NOTHING to do with the cost to rebuild. If the house burns to the ground, the insurancecompany does NOT have an option to "buy" it fromyou for the face amount - they are required torebuild. So, you can do it your way, and pay away, way, way lot of money for a small amount ofcoverage, or you can do it the insurance company'sway, and insure to full replacement value, forless money. Or, what most people like you preferto do, is just get a personal loan for the balanceof the mortgage, so you can pay off the mortgage,and not insure the house at all.
- answered by mbrcatz17
Answer #7
If you live in the state of Florida the insurancecompanies can increase without your OK and cancelyou for no reason. If someone wants to sell theirhouse they will run into a real problem because ofthe insurance rates right now. The insurancecompanies are rich and getting richer while peopleare losing their homes because of this. Ipersonally don't own a home but my daughter hasbeen trying to sell her house for 4 months now anddropped the price twice and still no takers..inFeb, if the house isn't sold she has to startpaying vacant house insurance that cost 3x theamount of regular insurance. My sister and herhusband's house insurance jumped $4000 and theyhave only had one claim in 30 yrs. Its real bad.
- answered by mardimum
Answer #8
Home insurance is not based on what is left onyour mortgage. They go on how much it would costto replace your home in todays market. Mostcompanies have a 5-10% inflation where it willautomatically increase to that amount without yourconcent. If you have $X left on your mortgage, youcan request insurance for that amount alone, butthere's no guaranteed replacement on the home andthey will envoke and co-insurance pentalty. Idon't know why you wouldn't want to insurance yourhouse to full value. It's best to call yourcompany and ask for options. Try a higherdeductible if the premium is too high for you :)
- answered by angel09
Answer #9
Mbrcatz17 is so right! HO-3 polices aren't to payoff your mortgage, but to rebuild your home andthis is why companies increase the coverage. Sometimes, however, it can be increased way toomuch and it can be negotiated. This is why youneed an agent. CALL YOUR AGENT!
- answered by mei-lin
Answer #10
It is called inflation guard. They increase thecoverage of your dwelling every year to keep upwith rising labor and materials cost. It hasnothing to do with claims or credit.Also insuranceis used to rebuild your home from the ground up,to indemnify you in case of a loss. It will notpay off your mortgage, nor does have to beanywhere close to what the market value of thehome is.
- answered by GrnEyedBandita
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measure and fulfill your financial needs
