Profile picture for arslanb

My min replacement cost in home insurance?

Hello,

I am trying to understand whether my lender needs the replacement cost to be equal to the loaned amount or not. I am getting different quotes from insurance companies so I am trying to understand if one of them is just trying to over sell me the coverage at cost of me paying higher premium.

It say this in the bank's documents that I received: "You must obtain hazard insurance equal to 100% of the insurable value (replacement cost) of the improvements as established by the property insurer."

How do you interpret this? Does this mean it has to cover at least the loan or it can be lower than that?

Thanks.
  • February 21 2010 - Clifton Park
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Answers (1)

Profile picture for Justin Kennedy

First are you doing a loan with no appraisal?
Ie FHA streamline, VA streamline?

Two options, the appraisal should have your est. value for dwelling and out buildings. Granted some insurance companies use their own formula which may have a higher per sq footage replacement cost than what the appraisal mentions. Better to be over insured than under insured. Think about life and umbrella policy as well

  • February 23 2010
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