Hi,
In 2003, my wife and I purchased a home in Kentuckyfor $200k. It is an historic home, built in 1883, and we have been renovating it ever since. Our home insurance policy is for a value of $600k, since this was an estimate of what the home would be worth after renovation.
Our best estimate, based on a recent bank appraisal, is that the home now has a market value of $650k, so we are probably a bit under-insured.
Our insurance agent has recently had our house appraised for $2.1 million. This appraisal is based on replacement cost. And he is now telling us that we need to pay extra $9k annually for insurance. He will not offer us a policy based on fair market value - only replacement cost.
In talking to our neighbors, who have similar homes, nobody is paying this kind of premium - not even close!!! I can understand why an appraisal came out at $2.1 million, because you can't really replace an old home like ours inexpensively - all of the woodwork, fireplaces, brick, etc. However, it seems like fair market value is the way to go for this type of home.
Can our insurance agent really do this? Can he just increase the cost without our signoff?
Do we have any option outside of finding a different insurer? And, do you know if there is an insurance company out there that will insure based on fair market value rather than replacement cost for an old home like this? I've called a few places, and they seem to prefer the replacement cost approach.
Thanks for any insight you can provide.
In 2003, my wife and I purchased a home in Kentuckyfor $200k. It is an historic home, built in 1883, and we have been renovating it ever since. Our home insurance policy is for a value of $600k, since this was an estimate of what the home would be worth after renovation.
Our best estimate, based on a recent bank appraisal, is that the home now has a market value of $650k, so we are probably a bit under-insured.
Our insurance agent has recently had our house appraised for $2.1 million. This appraisal is based on replacement cost. And he is now telling us that we need to pay extra $9k annually for insurance. He will not offer us a policy based on fair market value - only replacement cost.
In talking to our neighbors, who have similar homes, nobody is paying this kind of premium - not even close!!! I can understand why an appraisal came out at $2.1 million, because you can't really replace an old home like ours inexpensively - all of the woodwork, fireplaces, brick, etc. However, it seems like fair market value is the way to go for this type of home.
Can our insurance agent really do this? Can he just increase the cost without our signoff?
Do we have any option outside of finding a different insurer? And, do you know if there is an insurance company out there that will insure based on fair market value rather than replacement cost for an old home like this? I've called a few places, and they seem to prefer the replacement cost approach.
Thanks for any insight you can provide.