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YES! Market value has nothing to do with the reconstruction cost of a home. Your reconstruction value is how much it would cost to build your exact home from the bottom up, which is what your insurance company will do in the case of a total loss. They aren't going to "buy you a new house", they are going to rebuild you the exact one you already had.
Insuarance is based on what it costs to replace what you have, not on what you payed for it.
If you're paying less than the replacement value on the home for the home then they're correct. Will it take $300K to replace the buidlings and the contents? That's your guide.
We had to answer questions on sq ft, # of bathrooms, out buildings, appliances, etc. They came up with one number for the buildings and another number for the contents.
We got four quotes before we made a decision. All of the replacement estmates were about the same. The major difference was in the premiums.
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Homeowner Insurance Q
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megawhizz
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I am in the process of buying a house, and approached an insurance agent to ask about homeowner's insurance. The agent tells me that a home of this size has to have a coverage amount of almost 50% more than what I am payng for it! E.g. if I buy the house at $200k, I have to get dwelling coverage for $300k just because of sq. footage...
Is this reasonable? What will this mean - if the new house burns down, will they pay $300k for a brand new house? And how does this work with my mortgage company - do they care at all (as long as the insured value is at least equal to the mortgage)
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