My agent has confirmed [Insurance Company] replacement cost data is proprietary and not available for release to me or [Mortgage Company].
On page 1 of the declarations page I previously provided, my base dwelling coverage is $322,000. I have attached rider HO-420 to my policy, which is referenced as “30% specified additional amount of coverage – dwelling” on page 2 of the declarations page. Multiplying $322,000 by 1.3 yields $418,000 in dwelling coverage available in the event of a catastrophic loss.
My house is 2100 square feet of livable area. Thus I am covered for a replacement dwelling at a cost of $200 per square foot.
[Insurance Company] and I agree this is sufficient coverage protecting me (and the mortgage holder) from a total loss of the dwelling.
I haven’t received my [Mortgage Company] appraisal report yet, but I know from County records the land value of my lot is some $300,000. You have reported a total appraisal value of some $650,000.
The difference is an appraisal-based dwelling value of $350,000 (or $167 / sq.ft. ). This is far less than my $418,000 in coverage.
I will also point out that I have had my [Insurance Company] policy since shortly after my wife and I built the current dwelling in 1999. [Insurance Company] was provided with my builder contract at that time. The current coverage amount therefore is the inflation-adjusted actual construction cost of my home, not a cookbook calculation.
Finally, listed below are links to three current listings for homes under construction within four blocks of my house, along with links to the County records showing lot values. By taking the builder’s list price, subtracting lot value and dividing by square footage (same method as above), the actual cost per square foot to build a new dwelling in my neighborhood ranges from $150 to $180 per square foot. Once again, this is significantly less than my replacement coverage.
I trust this data will satisfy [Mortgage Company]’s questions. If not, please provide an explanation for why you believe $418,000 in dwelling replacement coverage is insufficient.