re: Home Value - Insurance Question

quote:

---

should I have my home reappraised for insurance purposes?

---

very likely... read the policy regarding coinsurance penalty.

IRMI

decent link on the subject


ETA: basically is says that in a loss you get penalized. Because you were not paying premium to cover the entire value.

$400,000 value
$250,000 insured
80% coinsurance clause
zero deductible for example only
$300,000 loss

claims adjuster comes out and writes you a check for 300 K if you are insured to 400.

since you are insured to less than 80% of value the loss would be paid like this:

300k loss
250K insurance 'did carry'
400k insurance 'should have carried

did over should = .625
300K * .625 = $187,500 paid to you for the loss

you just self insured the remaining 112,500.