Only want to purchase a $60000 policy

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Mar 29, 2012

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Insurance Question from Carthagena, OH

Asked on 03/29/2012

Only want to purchase a $60000 policy my home was built in the 40s as a fishing cabin its 900 sq ft. I only want to buy a policy for about $60000 because if anything happens to it it would be replaced with a mobil home not a cabin Every place i have priced tells me how much i would have to purchase, most well over $100000 Why cant i decide how much I want not what the industry wants?

Answer given on March 29, 2012

Insurance companies are not willing to allow their clients to underinsure a property because the cost of the insurance does not properly cover the risk to the company.If you insure the home for 1/2 of its value, and only a portion is damaged in a fire or claim, the insurance company may have to pay out the full value of the policy even though it is a partial loss. This works against the insurance company as to its right to collect a fair premium for an insured risk.There are some insurance companies that will allow you to insure a property for a lesser amount, but they usually will depreciate any loss rather than paying a replacement cost figure. Most of these companies are specialty companies and are few and far between. You should talk to your agent about such insurance. If you do not have an agent, find an independent agent who may have access to such an insurance company.You may also check into a higher deductible and insure the property for its full replacement cost value. The increased deductible may help offset any addiitonal costs you incur for having to purchase more insurance.

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