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I made a purchase of 30 acres and a house and a shop as one purchase. So I had to get insurance to cover the loan amount. But the insurance will only replace the house. Not the shop and of course no dirt for the the land that is adding value to the loan and making insurance coverage go up. Is there a way for me to just cover the house on the insurance or is this the way it works? I just don't see why I have to pay windstorm coverage for 150,000 dollars more than what the house value is when the insurance will only replace my home which values at 100,000..
I made a purchase of 30 acres and a house and a shop as one purchase. So I had to get insurance to cover the loan amount. But the insurance will only replace the house. Not the shop and of course no dirt for the the land that is adding value to the loan and making insurance coverage go up. Is there a way for me to just cover the house on the insurance or is this the way it works? I just don't see why I have to pay windstorm coverage for 150,000 dollars more than what the house value is when the insurance will only replace my home which values at 100,000..
Because they have to have replacement value for what it costs to rebuild, not what it's worth. Certain areas cost more than others to build in also.
If you have a mortgage on a $50k home the insurance company will tell you that it has to be insured for replacement value which is closer to $100K.
Replacement value is only 100,000 for the home. But my loan was for 250,000. So I my bank said my insurance had to cover the loan amount. But the loan amount includes 30 acres with nothing on it. And the shop. My question is if my insurance is only going to replace the home but is making the amount high enough to cover the dollar amount how can I separate this? Because I'm actually paying insurance for 250,000 replacement value but if something happens my insurance will only replace the house. Is it possible to seperate land and have it on a separate mortgage so I don't have to include that dollar amount on my insurance?
Replacement value is only 100,000 for the home. But my loan was for 250,000. So I my bank said my insurance had to cover the loan amount. But the loan amount includes 30 acres with nothing on it. And the shop. My question is if my insurance is only going to replace the home but is making the amount high enough to cover the dollar amount how can I separate this? Because I'm actually paying insurance for 250,000 replacement value but if something happens my insurance will only replace the house. Is it possible to seperate land and have it on a separate mortgage so I don't have to include that dollar amount on my insurance?
Because they are insuring your land too, if anyone gets hurt on those 30 acres you policy will have to pay out. There is more to homeowners insurance than replacement. The lender wants to make sure the full loan amount is covered.
Because they are insuring your land too, if anyone gets hurt on those 30 acres you policy will have to pay out. There is more to homeowners insurance than replacement. The lender wants to make sure the full loan amount is covered.
Sorry, but on land loans, insurance is not required. I've never heard of a lender requiring liability coverage if there are no structures and the land is not providing income. If this is desired, an umbrella liability policy can handle this.
More info needed - is this a working farm? Are there employees on your property?
OP, state coverage requirements vary, but chances are you need coverage to replace the home or for the loan amount. Whose replacement cost are you quoting? The appraisal has a cost to rebuild (minus the land). If the insurer is saying they will replace the home for 100K, check this against your state requirements. Chances are you will be required to have 100% of replacement cost. If they are willing to put in writing that 100K will cover 100% of replacement cost, I would take that to the State insurance office for an opinion. Now if the insurer won't put that in writing, you are stuck with 150K coverage. There's always the chance you got someone new on the insurance team at your lender, so a second request wouldn't be amiss. Or, the other thing we run into are the quirky policy names, like Golden Eagle or Golden Blanket, which signifies 150% of the dollar policy. Lenders aren't mind-readers, so the insurance company must spell it out.
Yes this is a working farm being leased out. Nothing on it other than dirt and a tractor run to harvest crops
Is it possible I can terminate the lease and then ask to not insure the value of the land?
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