HO-03 Question

[dotsonmw01]

Lets say a client has a HO-03 and coverage A of $200,000 of coverage. They incure a total loss, its going to cost $150,000 to rebuild at the current premises. What would they pay if they deceided to go and build elsewhere?

 

[markschneider86]

They won't build anywhere else. Insurance is a no loss, no gains product. I have seen insurance companies settle in different ways, but I think Travelers has the only policy(its not the regular HO-3) where you can take your money and walk. They will rebuild on the same location. Why would you over insure a house like that too? I can see having an extra 10 to 15 percent coverage, but not that much.

 

[djs]

It all depends.

Nothing, except a mortgage, city ordinances, local laws, etc, require rebuilding. If nobody else requires you rebuild, I don't know of any insurance company that actually requires you rebuild. If there is a mortgage, you will have to rebuild though. If you live in a city, chances are, you have to rebuild.

Also, financially, it is usually a bad move to not rebuild. If you rebuild elsewhere, you will receive acv value to rebuild your house, not actual rebuild cost, even if you have replacement cost endorsed on the policy. The requirement to get replacement cost on every policy I've seen is you have to replace it.

The problem starts when the first check is cut and it's made out to the insured AND the mortgage company. Yes, the insured can sign it over to the mortgage company if it's large enough to pay off the mortgage.


Dan

 

[joshb]

They won't build anywhere else. Insurance is a no loss, no gains product. I have seen insurance companies settle in different ways, but I think Travelers has the only policy(its not the regular HO-3) where you can take your money and walk. They will rebuild on the same location. Why would you over insure a house like that too? I can see having an extra 10 to 15 percent coverage, but not that much.

Chubb will give you the option as well, per their brochure. Never had it come up though.

 

[markschneider86]

Like I said I know where I stand. I have the P & C license in Co.