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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby bercleah » Sat May 19, 2012 10:36 pm

We have a home that was built in 08 and currently the value of the home is about 150k less than what we owe on it. Pretty depressing, but what happens if the house does burn completely down? Will they only pay the value of the house or your whole mortgage? Is there an additional coverage like cars have with the gap insurance? I just want to make sure that if the worst happens we won't be screwed for the difference. Thanks!
bercleah
 
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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby amias40 » Sat May 19, 2012 10:45 pm

What u are looking for is called
"replacement valuation" of house.
it is the actual cost to rebuild ur house
to exact specifications of present house.
ie replica. this is often different than
last appraisal and mortgage.
yes u can be left holding the bag.
the other item u looking for is
"house contents" this u need house
inventory and documentation of all
things in house to get $$ for stuff.
amias40
 
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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby ronell » Sat May 19, 2012 10:49 pm

No your house is valued on your insurance papers. That's what they should pay depending on what type of insurance you have. There is replacement and that is good to replace what you have usually minus a big deductible and there is the other and they depreciate everything to its current value and that's what you get paid and it can be very little. You will never get more than the value on your insurance papers. If you have undervalued your house to lower your amount due, then that's what they pay and you still owe the difference on your house. I don't know about gap insurance. The best thing is to keep asking your agent lots of questions and reading your policy to be sure you have been told correctly.
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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby steward » Sat May 19, 2012 10:53 pm

They only pay the cost of replacing your home to the lesser of the amount on the policy, the cost of rebuilding or the cost of a different equivalent home in the same area.

You cannot make money on a fire.
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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby chatima » Sat May 19, 2012 11:09 pm

Hi Depecher,,

Read what your policy says. If you don't fully understand it ( as many of us don't), then call your insurer and ask him/her the same questions. Write down the name of the person you're speaking to, and the date as well as the answers they give--these things sometimes can matter. I often record conversations, after informing the person upfront that I'm going to do it, just for the sake of accurate note-keeping.
chatima
 
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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby torrence68 » Sat May 19, 2012 11:15 pm

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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby rice44 » Sat May 19, 2012 11:26 pm

Yes they will cover it. How much you owe on the mortgage has nothing to do with it.
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What will home owners insurance pay if your house burns down and home value is much less than your mortgage?

Postby otaktay43 » Sat May 19, 2012 11:35 pm

As with other insurance, an insurance policy is part of the insurance transaction. In mortgage insurance, a master policy issued to a bank or other mortgage-holding entity (the policyholder) lays out the terms and conditions of the coverage under insurance certificates. The certificates document the particular characteristics and conditions of each individual loan. The master policy includes various conditions including exclusions (conditions for denying coverage), conditions for notification of loans in default, and claims settlement.[7] The contractual provisions in the master policy have received increased scrutiny since the subprime mortgage crisis in the United States. Master policies generally require timely notice of default include provisions on monthly reports, time to file suit limitations, arbitration agreements, and exclusions for negligence, misrepresentation, and other conditions such as pre-existing environmental contaminants. The exclusions sometimes have "incontestability provisions" which limit the ability of the mortgage insurer to deny coverage for misrepresentations attributed to the policyholder if twelve consecutive payments are made, although these incontestability provisions generally don't apply to outright fraud.
Wanted to learn a hardship letter sample for your mortgage especially in dealing in loan modification and foreclosed property communications.

Hope this a help!
God bless!
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