Homeowners Insurance - Coverage A

[Hape2Bhr]

I am beginning the search for Homeowners Insurance. Coverage A is the costliest section, and I have received large variances between some of the proposals. We have a mortgage and I do know the mortgage provider requires at least enough coverage to cover our balance. The other variable is replacement cost due to catastrophic damage. We live in a CYV, and I would like to know what is considered the replacement cost of a 2B2B CYV. Is this information readily available?

[retiredguy123]

I'm not sure exactly what you are asking, but if your courtyard villa is completely destroyed, you will need to get an insurance payment equal to the market value of the house less the value of the lot. Any experienced real estate agent can tell you the market value of houses similar to your house. If you can't rebuild the house for the market value, it would not be worth rebuilding.

[Babubhat]

It’s the cost to rebuild. Market value is irrelevant. Being under insured is a terrible mistake.

Home Insurance Calculator: Estimate What You Need | Progressive (https://www.progressive.com/homeowners/insurance-coverages/calculator/)

[Hape2Bhr]

I'm not sure exactly what you are asking, but if your courtyard villa is completely destroyed, you will need to get an insurance payment equal to the market value of the house less the value of the lot. Any experienced real estate agent can tell you the market value of houses similar to your house. If you can't rebuild the house for the market value, it would not be worth rebuilding.

If TV builds and then sells houses at market value, how would they make any money? The house itself needs to be built/constructed for less than market value.

[retiredguy123]

If TV builds and then sells houses at market value, how would they make any money? The house itself needs to be built/constructed for less than market value.
I was referring to the amount of insurance needed to make you whole. If you receive less than market value from the insurance policy, you will lose money. I would want to receive enough money to buy another house. I wouldn't want to wait 6 months to a year for a new house to be built on the same lot. And who will pay for your housing expenses while the new house is being built? Also, I don't think you can rebuild a house for less than market value because your construction cost will be way higher than The Villages' construction cost.

[kkingston57]

I was referring to the amount of insurance needed to make you whole. If you receive less than market value from the insurance policy, you will lose money. I would want to receive enough money to buy another house. I wouldn't want to wait 6 months to a year for a new house to be built on the same lot. And who will pay for your housing expenses while the new house is being built? Also, I don't think you can rebuild a house for less than market value because your construction cost will be way higher than The Villages' construction cost.

A lot of remarks here about market. Was in the biz, person needs to buy insurance based upon the replacement cost based upon the actual construction quality of the home. That amount does not fluctuate like market prices.

[retiredguy123]

A lot of remarks here about market. Was in the biz, person needs to buy insurance based upon the replacement cost based upon the actual construction quality of the home. That amount does not fluctuate like market prices.
Thanks. I understand, but to make you whole, all you need is a settlement for the market value of the house, so you can purchase another comparable house. I think the market value of the house is an important factor in how much insurance you need. I wouldn't want to pay for $400K in insurance to insure a house with a market value of only $300K.

[Hape2Bhr]

I was referring to the amount of insurance needed to make you whole. If you receive less than market value from the insurance policy, you will lose money. I would want to receive enough money to buy another house. I wouldn't want to wait 6 months to a year for a new house to be built on the same lot. And who will pay for your housing expenses while the new house is being built? Also, I don't think you can rebuild a house for less than market value because your construction cost will be way higher than The Villages' construction cost.

A lot of remarks here about market. Was in the biz, person needs to buy insurance based upon the replacement cost based upon the actual construction quality of the home. That amount does not fluctuate like market prices.

I understand RG's point, but KK's sounds closer to the answer I might be looking for. The actual reconstruction of the building only, seems as if it would be less than market value. Are there standard formulas for different grade reconstruction costs? Do insurers simply say buy this much and you will be more than covered in any loss?

[retiredguy123]

I understand RG's point, but KK's sounds closer to the answer I might be looking for. The actual reconstruction of the building only, seems as if it would be less than market value. Are there standard formulas for different grade reconstruction costs? Do insurers simply say buy this much and you will be more than covered in any loss?
I have built houses in the past. At this stage of life, I have no interest in doing it again. Too many headaches. I disagree that you can reconstruct a destroyed house for less than market value. The Villages builds houses for a lot less than an individual can do it. And you will be building a new house among older houses which will affect the market value. Don't forget demolition and design costs. And remember that you are not referring to the building only, because, if you buy another house, you still own the old lot, which you can sell.

[spinner1001]

I understand RG's point, but KK's sounds closer to the answer I might be looking for. The actual reconstruction of the building only, seems as if it would be less than market value. Are there standard formulas for different grade reconstruction costs? Do insurers simply say buy this much and you will be more than covered in any loss?

Generally, such cost formulas are based on square footage, kind of construction, and location. I doubt that information is publicly available on the internet. Commercial real estate appraisers and home builders in the area likely know that kind of information for one-off construction. Ordinary residential real estate appraisers probably do not know since they generally do their work only applying the ‘market approach’ of valuation looking at sales of similar homes. Construction costs involve both hard and soft costs. Soft costs can be substantial. Also, demolition costs might be relevant for your insurance decision.

Practically, a rule of thumb for construction costs of between A% and B% of market value might be good enough for your purpose without spending a lot of research time. (Rules of thumbs come with the usual caveats.) The link below might be helpful for your insurance decision.

ChatGPT - Estimating Home Construction Costs (https://chatgpt.com/share/6788fd46-4718-8003-ad07-a7afd9f5de4e)

[Deckboat234]

A lot of remarks here about market. Was in the biz, person needs to buy insurance based upon the replacement cost based upon the actual construction quality of the home. That amount does not fluctuate like market prices.

Kkingston57 is correct. Rc needs to be based upon what you have in the house. For example, you may have tile showers where your neighbors are less expensive fiberglass. Same with floors etc.

[SHIBUMI]

Nobody insures for market value, its replacement value, if a 1200 sq ft house in California with a market value of 1 million burns down, its the replacement value to rebuild the house which won't be 1 million dollars and you are not entitled to market value.......... if during the housing crisis, when that 1200 sq foot sold for 100,000 your insurance was still the cost to replace 250-3000 est.

If you add coverage to loss of use, add a lot, then you have a place to live until the rebuild....


I have built houses in the past. At this stage of life, I have no interest in doing it again. Too many headaches. I disagree that you can reconstruct a destroyed house for less than market value. The Villages builds houses for a lot less than an individual can do it. And you will be building a new house among older houses which will affect the market value. Don't forget demolition and design costs. And remember that you are not referring to the building only, because, if you buy another house, you still own the old lot, which you can sell.

[retiredguy123]

Nobody insures for market value, its replacement value, if a 1200 sq ft house in California with a market value of 1 million burns down, its the replacement value to rebuild the house which won't be 1 million dollars and you are not entitled to market value.......... if during the housing crisis, when that 1200 sq foot sold for 100,000 your insurance was still the cost to replace 250-3000 est.

If you add coverage to loss of use, add a lot, then you have a place to live until the rebuild....
My current policy coverage is very close to market value, so I am satisfied. If the insurance company wants to rebuild the house, that is fine, but I don't think they can do it for less than the market value.

[BleuM&M]

Last year our agent went to the county building dept to get an estimated replacement cost because the insurance renewal estimate was WAY too high. The insurance co accepted the revised amount.

Also, you might want to look into a policy that can delete Coverage B - additional structures. There are none with most homes and villas. If you have a birdcage or other structure attached to the home, it's considered part of the home, just like an attached garage. That can save some $$.

[hollyrich2]

The replacement cost is determined by the agent. They need to verify the characteristics of your home and its finishes. I would be happy to provide a quote and have helped many people in The Villages secure the coverage that meets their needs and insures the property to its replacement cost. Please feel free to contact me 954-437-9220 ext. 308 or hrichardson4@allstate.com. I attached my flyer.

[FenneyGirl]

I am beginning the search for Homeowners Insurance. Coverage A is the costliest section, and I have received large variances between some of the proposals. We have a mortgage and I do know the mortgage provider requires at least enough coverage to cover our balance. The other variable is replacement cost due to catastrophic damage. We live in a CYV, and I would like to know what is considered the replacement cost of a 2B2B CYV. Is this information readily available?


Coverage A is determined what it will cost to replace your home , not at market value , but the actual cost to repair and or repair. If building costs have increased , that is considered. A software program actually does this. I was a homeowners claims adjuster for over 25 years. I was licensed in all states.

When you get your policy , the policy service rep will ask you for info on your home. Type of structure, features like granite vs laminate countertops. Etc.

I would suggest insure the home for replacement costs. Make sure that you insure your personal property , Coverage C, what it would cost to place your items. I had one claim where a persons home totally burned down to the ground. Their Cov C was $60,000. Their Steinway piano was valued at $75,000.

Never cheap it out on HO insurance. The RCC changes all the time. Get full coverage.

[vds2020]

I was referring to the amount of insurance needed to make you whole. If you receive less than market value from the insurance policy, you will lose money. I would want to receive enough money to buy another house. I wouldn't want to wait 6 months to a year for a new house to be built on the same lot. And who will pay for your housing expenses while the new house is being built? Also, I don't think you can rebuild a house for less than market value because your construction cost will be way higher than The Villages' construction cost.

Replacement cost has nothing to do with market value.

[Gatorfan1]

Thanks. I understand, but to make you whole, all you need is a settlement for the market value of the house, so you can purchase another comparable house. I think the market value of the house is an important factor in how much insurance you need. I wouldn't want to pay for $400K in insurance to insure a house with a market value of only $300K.

Insurance companies insure for cost to rebuild when you purchase. Inflation coverage is included which increases your coverage based on actual cost to rebuild. There is a replacement cost endorsement you can purchase. % of replacement cost depends on what company offers. 20%, 25%, etc. You do have to rebuild for the inflation endorsement to respond.

Mortgage companies in Florida under Florida law can not require
Insurance company to insure mortgage amount if it is more than actual cost to rebuild.

This is why it is important to talk to local Agents who knows Florida laws.