How to determine homeowners insured value

[Mulligan]

It's a matter of everyone paying a fair premium in relation to their expected losses. Because of smoke detectors and access to local fire departments, total losses are rare. Typically it's a kitchen fire or a lightning strike. Let's say your house is worth $200K but you want to insure it for only $100K because it's paid off and you figure that's the worst loss you'll ever have. Should you pay the same premium as the person down the street who really does have a $100K house and insures it for that? You've got a much bigger probability of a $100K loss than they do. (Trust me, I'm a retired property/casualty actuary. )

And I like the tactic suggested earlier of subtracting a reasonable value for the land, backing into cost per square foot, and comparing it to new construction. I'll have to remember that.

The story of the company willing to insure an oceanfront house for $15K floored me- then I realized the insurer was probably happy to be on the hook for only that much if it washed away in a hurricane. My parents have a house a mile away from the beach, fully paid for, and just decided to go bare. They said the land is worth more than the house, anyway.

I understand to an extent what your saying. And mainly because I am only thinking in terms of "I want $100,000 of insurance and I will cover the rest". The other person could insure less too and pay less and cover the additional repair cost. But in reality to me anyways is the other extreme that is where I am at. I can't get them to insure under 200k and pay 50k for out buildings that I have no such type of building. So I guess there I am subsidizing other peoples buildings or the insurance carriers profits for paying for something that I do not have. Nothing short of nuclear radiation needing to dig my yard 100 yards deep into the ground would I ever need the cost amount of coverage I am forced to carry. Sorry, end of rant.



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