When insuring a home, are you covering the appraisal of home, the purchase price, or cost to rebuild?

Question

Which number do I shoot for ? Different people are telling me different things & we are first timers over here. HELP!!

Answer 1

Insurers are interested in the rebuilding cost. They should ask for this explicitly.

Answer 2

It should always just be the cost to replace, no more! If costs go up than so should your insurance. Now as for the items in your house they should be covered by a type of rider on your home owners policy, and have a seperate cost if you choose to cover those items that would be lost in a peril. If your mortgage company is asking you to have more ins than the replacement cost than there is a problem.

Answer 3

Talk to your agent, talk to your agent, talk to your agent....

Agents are waiting to talk to their clients....

Answer 4

Well, the person you should listen to, is YOUR AGENT, or rather, the agent selling you the policy.  See, different policies are based on different things.  MOST homeowners policies - the cheapest ones - are based on the cost to rebuild your home.  A low value home, though, like an old three story in a rotten neighborhood, might have a policy based on market value, or "functional replacement cost".  

So don't take any advice about which value to use on the home, except from the person who knows which type of POLICY you've got on that house.  Appraisal value, btw, is usually the same thing as market value, which is the same thing as purchase price.

Answer 5

cost to rebuild because the value of the home includes the value of the land that it sits on and that land will be there even if the home is completely destroyed.

Answer 6

You are insuring much more than that.  You are insuring all that is valuable in the home, replacement of all values like electronics, couches, fridge, ect.  You really need to sit with your agent and have him explain this to you.  He is the pro and you should find one you trust.

Answer 7

your lookiing at rebuilding costs....putting you in the same position your in right now with like materials. Your also covering contents and any outbuildings you have on your property too.(outbuildings and contents are worked into your premium) Your premium is the amount of insurance you have purchased for your home to rebuild.

Answer 8

different for different policies...talk to your agent and he can give you options.

most policies will cover cost to rebuild but you must be within a percentage of rebuilding cost or you will have to pay the difference.

Answer 9

Replacement value. Think about it: If you home is destroyed, does it matter if the appraised value had risen by $100,000 since you bought it? Or plunged $50,000? The only thing that matters is how much it would take to rebuild to the original condition. It is very important to take into account any upgrades or remodeling you do (see article below). Also, since you are “first timers,” be sure to consider earthquake insurance, no matter where you live but especially in any Western state. Earthquake damage is not covered by standard homeowners insurance, yet it can wipe out your equity and leave you trying to repair your home out of your savings. The chances of a major quake may seem remote, but the downside—having a home you cannot sell and cannot afford to repair—is too great to ignore.

Answer 10

It's the cost to rebuild.  I've owned a home since 1992, and that is what it is.  Remember when your house is appraised, your land is also included.

Answer 11

depends on what policy that you pick the general rule in what the cost to rebuild the home.