Why is my homeowner insurance amount more than what I paid for my home?
Free Insurance Quote Comparison
Secured with SHA-256 Encryption
UPDATED: May 10, 2010
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
Insurance Question from Fresno, CA
Asked on 05/10/2010
Why is my homeowner insurance amount more than what I paid for my home? NULL
Answer given on May 18, 2010
This is a good question. The amount you paid for your home is based on the market value at the time of the purchase. You’re paying for the neighborhood, the school system, how close your home is to the freeway, etc. You’re also paying for land.
The cost of homeowner’s insurance is based on the cost to rebuild your home in the event of a total loss. It costs about 25% more to rebuild your home than it did in the first place. Part of the reason is because it takes a more skilled laborer to build around an existing structure that is partially damaged, than it does to build from scratch. Another part is that it is includes debris removal.
Homeowner’s insurance also pays liability coverage, it pays for your belongings in case they are damaged or are stolen, and it pays for your additional living expenses while you’re away from home, while your home is being repaired due to covered damage.
But the real answer is that your Coverage A, or dwelling coverage, doesn’t fluctuate the same way that the value of your home can fluctuate, depending upon the market. In a booming market, the value of your home can be much higher than what it costs to build, or rebuild. In other times, the value is higher than the rebuild cost.
IMPORTANT NOTICE: These answers are for general information purposes only and are provided by the person answering and FreeAdvice.com AS IS. It has not necessarily been reviewed by the management staff of FreeAdvice.com nor is it binding any insurance agent, broker, or other insurance professional or any attorney or insurance company. Insurance laws, regulations and practices vary from state to state and insurance policies and practices differ from company to company, by type of policy, by state and locality and by type of insurance. Tiny variations in the facts, policy language or a detail not set forth in a question often can change the outcome or a professional's conclusion. Although FreeAdvice.com has confirmed that the answer(s) was/were provided for the account of an experienced insurance professional, that professional may not be licensed in the state referred to in the question, and may not be experienced or up to date in the subject area. Unlike the answers provided here, upon which you should NOT rely, for personal advice you can rely upon we suggest you consult a licensed insurance professional in your area or retain a licensed attorney listed on AttorneyPages.com to represent you.