SeaDeezKnots
Expert
I recently wrote a client who lives in a home which was purchased 5 years ago for $359K which I set the dwelling limit to $479K. The inspection took place a week ago and the inspector estimated the replacement cost to over $700K. Of course, the carrier is now saying the dwelling limit will have to be increased to reconcile the difference, hence increasing the premium substantially.
I understand that purchase price and replacement cost are two different things but for it to cost $250K more than the current limit I set? Also, homes in the same neighborhood with similar square footage are selling for $350-$400K, the appraisal district has it appraised at $379K, and the owner's prior carrier set the dwelling limit at $435K. Again, I know, market vs. replacement cost but this difference is really confounding.
If the home was underinsured, wouldn't the bank (the home is mortgaged) take issue with the dwelling limit? At this time, they are not and haven't taken issue to the limit. Has anyone encountered this before? For fear of driving away this business, I'm contesting this estimate with the inspection company. I'd try to write it through another carrier but my initial quotes weren't that competitive. Any suggestions on how to handle this would be greatly appreciated.
I understand that purchase price and replacement cost are two different things but for it to cost $250K more than the current limit I set? Also, homes in the same neighborhood with similar square footage are selling for $350-$400K, the appraisal district has it appraised at $379K, and the owner's prior carrier set the dwelling limit at $435K. Again, I know, market vs. replacement cost but this difference is really confounding.
If the home was underinsured, wouldn't the bank (the home is mortgaged) take issue with the dwelling limit? At this time, they are not and haven't taken issue to the limit. Has anyone encountered this before? For fear of driving away this business, I'm contesting this estimate with the inspection company. I'd try to write it through another carrier but my initial quotes weren't that competitive. Any suggestions on how to handle this would be greatly appreciated.
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