brisca

Hi there,
Typical Holiday villa in Florida.
Should I insure it for the market value ($300k) or the rebuild value which is considerably less. It was originally insured for the market value, but this has not kept pace with real estate prices and I now find the insured value is about $100k behind the market value.
Question is, with the Hurricane season approaching should I redress the balance and up my insurance?

snowbunny

Discuss it with your insurance agent, but in general, they will not PAY more than replacement (rebuild) value so there's no point in paying over that amount.

If you lease the villa to others whilst not living there, and receive an income, I would discuss that as well. I don't think it's possible to insure against lost income in the case of extensive damage, but you might check.

Ray

You need DP3 insurance for replacement value.....

scrubbedexpat099

I believe that there are some States that require Insurers to pay the full sum insured in the event of a total loss.

My State is not one of them, no idea about Florida.

Many Insurers include a 20% or so margin on top of the sum insured, and can value your home using software they have access to.

Total losses are the exception, most losses are partial.

Whilst increased Real Estate valuations may be impacted by increased rebuilding costs, usually the biggest factor is land, which will still be there, even if the house has been washed away.

And you can insure rental income.

snowbunny

Yes and no..... land can be rendered useless if there are toxins there, or if there's a landslide or other erosion, or if it is no longer advisable to build there because of new knowledge of threats (eg New Orleans levees not holding).

In these cases where rebuilding is impossible, is the value of the land compensated?

scrubbedexpat099

Simple answer - No (see exception mentioned in my earlier post but that would only apply in the event of a total loss).

Pollution, I believe is excluded from all Homeowners policy. A Homeowners policy covers the Building, not the land. A few minor exceptions.

Your example was not actually new knowledge, always when, that's why there was no commercial coverage.

Most pollution issues are man made.

My assumption that in this case Flood coverage would be provided by the Government scheme. Which is more restrictive in its settlement basis than most commercial coverages. http://www.fema.gov/business/nfip/

snowbunny

What about landslide/earthquake?

Manc

usually is covered subject to a percentage deductible.

In my state Market value means bugger all.
The limits of the policy will be capped at the Replacement cost of the property.

Giantaxe

I don't think that's correct. Standard homeowners policies don't include flood/earthquake or even subsidence. The first two typically have to be purchased separately and often come with large deductibles. Very limited coverage compared to the UK - unless things have changed there. Of course, there ain't a lot of earthquakes in the UK!

scrubbedexpat099

It is generally trues that the standard broad form definition of insured perils in the UK is less restrictive than in the US.

But UK is subject to Eartquakes, seem to remember one in Brum a few years back and reading that the UK was subject to a large number every year, but usually very minor.

Subsidence/Land Heave is not usually part of US coverage, but then it is becoming more restrictive in the UK as well, I think that the reason there is still cover is down to historicality and pressure from lenders.

Pulaski

But with most houses being timber frame construction, subsidence isn't a major issue because (i) US homes are very considerably lighter than the typical British home which is a big ol' pile of masonery, and (ii) if a US home does suffer subsidence you may find that the sheetrock buckles or splits, but the timber frame is still going to hold its nails, and remain structurally safe. Repair therefore, in the US, is confined to filling the cracks, or, in extreme cases, stripping off the sheetrock and replacing it. A crack in the wall of a British masonery-built house is a whole different kettle of fish!

snowbunny

That has me wondering -- is it worth it to build a US home out of masonry vs a timber frame? Better insulation, will last longer.... but only if no subsidence?

Seems like the subsidence would be worse in England -- how does one have both lovely gardening soil *and* be able to compact or get down to bedrock so that subsidence isn't an issue?

Was considering this issue just the other night.

scrubbedexpat099

I was associate subsidence with clay, not good for gardening.

Timber is much cheaper, and quicker. Where I am we sit on rock, blasted out.

Norm here is to dig a big hole, concrete florrs and walls for basement and then build the house on top.

Subsidence and heave usually are impacted by water, of which we have not a lot.

Giantaxe

I would have thought that most subsidence was caused by soil conditions - in particular expansion and contraction caused by water content - as opposed to the weight of the house. Additionally, most of the damage is going to be to the foundation as opposed the timber framing.

Manc

whom mentioned flood? That wasn't the question.

earth movement / earthquake insurance can be purchased as an endorsement on most homeowner policies, and is subject to a percentage deductible.