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Updated over 9 years ago on . Most recent reply

User Stats

77
Posts
5
Votes
Dave G.
  • Indianapolis, IN
5
Votes |
77
Posts

What's the deal with Replacement Value?

Dave G.
  • Indianapolis, IN
Posted

I was just doing some due dilligence on a proprety and I spoke to my Insurance Company (USAA), and had a mild heart attack when they told me how much it would be to insure.  1st I ran it online and it came to be ~$6k/yr. I called because I swore I did something wrong, but the most she could do is halve that number. That's still $250/mo with a 10% deductible! 

I digress, a little about the house: It was built at the end of the 1800s. It has been uninhabited for at least the last 5 years, probably 10. It sits in a nice neighborhood, but the houses are going for only $250k (they are all old and have been rehabbed in the last 10 years). 

She quoted me that replacement value was $630k! How the hell did she come by that number? The City has it assessed at less than $50k. She mentioned that they would have to source materials identical to what is there now. Well if the house burns down.. I dont want that old *** house with knob and tube, plaster walls, and single pane windows... I want modern building practices. I'd take a $200k check and I would still say thank you.

I tried saying to her... well I wont replace it with a $630k home. I wouldnt be totally sure I would rebuild there. 

How do I get this insurance down to a reasonable price? 

Most Popular Reply

User Stats

3
Posts
2
Votes
Paul J.
  • Investor
  • Dallas, TX
2
Votes |
3
Posts
Paul J.
  • Investor
  • Dallas, TX
Replied

Dave although USAA is one of the better Insurance companies they do have high premiums. Call a Independent Insurance who represents many Insurance companies because he is Independent. If you are near a farm community you may want to look into Farm Bureau insurance.

Paul 

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