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Thread: Any insurance people?

  1. #1
    Member jimbroznan's Avatar
    Join Date
    Jan 2005
    Posts
    27

    Any insurance people?

    Just got my home owner's insurance(Amica) renewal; they changed my roof coverage from replacement to "actual cash value", without asking me or any indication how much I am saving. The premium is $2,000 for $238,000 dwelling coverage-I have had one hail claim in 20 years. The thing is if the house ( house, is 60 years old), was to burn down I would not rebuild. Both the houses directly behind me and next door sold for $520k-$600k and were torn down, the house next door is currently under construction and has already sold for $1.5 million. It is my understanding if you do not rebuild the insurance company will only pay you Actual Cash Value. Now ACV is calculated by Replacement-Depreciation. Depreciation is 3.6% a year so after 27 years a house has $0 ACV. So am I correct that if my house was totaled and I did not rebuild I would collect nothing? Actually the value of my house/lot would increase by $30k if it burned down since it would save demolition cost. Would an insurance company write a policy for $50k coverage to cover damage to a room or two?


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  3. #2
    Strategery RFS62's Avatar
    Join Date
    Apr 2000
    Location
    Naples, Florida
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    16,727

    Re: Any insurance people?

    Nope. You'll get ACV if the house burns down and get the recoverable depreciation once you rebuild. If you don't rebuild, you won't get the depreciation (the difference between RCV and ACV). This is assuming you have a replacement cost policy.

    And they won't depreciate you the way you're thinking. 3.6% across the board isn't the way it works.
    "Thinking is difficult. That's why most people judge" ~ C.G. Jung


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