Buying home can't get insurance due to market conditions in DFW..

[rabbit33]

Originally Posted by serger

I don't understand, how is liability only going to help you if the house burns down? Liability covers injuries somebody might sustain while on your property, or damage to someone else's property e.g. your tree falls on your neighbor's house or something.

Read the third paragraph in my post.

[Lillie767]

Originally Posted by serger

I don't understand, how is liability only going to help you if the house burns down? Liability covers injuries somebody might sustain while on your property, or damage to someone else's property e.g. your tree falls on your neighbor's house or something.

The owner self-insures the house and is responsible for rebuilding. This is a limited exposure financial risk: up to whatever you want to spend rebuilding.

However, liability risk is open-ended- there is no maximum or cap on how much someone who sues you can be awarded. They could take everything you own and then some (except for some states which limit homestead and certain retirement assets).

So, you may be willing to take on the limited financial risk from the house burning down but want liability insurance to protect the unlimited financial risk of a lawsuit, particularly if a death is involved.

[Lillie767]

Originally Posted by Northrick

So, what makes a $1.5M house $1.5M? Land, location, market, or does it really cost that much to rebuild the house if it were to burn down? Seems that the insurance should be for the actual cost of reconstructing the house, which I bet isn't $1.5M. Much of the value is in where it is at, not the price of lumber. The location doesn't change if the house itself is destroyed by some sort of disaster. I know this doesn't help the OP find insurance but it seems that many people don't value things properly.

I understand and agree with you, somewhat.

Year ago, before all this real estate mania, I purchased a house and land in one of the NYC suburbs. I needed a mortgage for the property and the mortgage company insisted on homeowners insurance. Very reasonable request.

Well, the insurance company valued the house as significantly less than the total mortgage because the "property" being purchased included 1 1/2 acre of prime Connecticut real estate. They would only insure the value of the house.

The mortgage company wouldn't accept insurance for less than the value of the mortgage (I always assumed that they had robots following a rule book in their underwriting department.) I convinced the insurance company to write the policy for the value of the mortgage and I would pay the full, inflated premium. The insurance policy had a disclaimer that the limit of the value of the policy was the full replacement value of the house notwithstanding other higher values in the policy.

The mortgage company issued my mortgage and went away happy. The insurance company collected a higher premium than the actual risk would require so they were happy.

[rabbit33]

Well, you can't insure the land. The land doesn't go away if your house burns down. You can only insure the value of the improvements.

[serger]

Originally Posted by rabbit33

Read the third paragraph in my post.

Ok, perhaps I misunderstood.

[serger]

Originally Posted by Lillie767

The owner self-insures the house and is responsible for rebuilding. This is a limited exposure financial risk: up to whatever you want to spend rebuilding.

However, liability risk is open-ended- there is no maximum or cap on how much someone who sues you can be awarded. They could take everything you own and then some (except for some states which limit homestead and certain retirement assets).

So, you may be willing to take on the limited financial risk from the house burning down but want liability insurance to protect the unlimited financial risk of a lawsuit, particularly if a death is involved.

That's fine.

The post I replied to did not make it clear (or I missed that) that the house burning down can be handled.

[JTC Mom]

Where is the house? Because of high land values in Dallas county a $1.4M house probably has a structure value under $1M, maybe significantly under $1M. You may need a better insurance agent, and your realtor should help you source one to help get the deal done.

One possible issue...even within the insurance company you are dealing with there can be challenges associated with lack of understanding of the local market. A little over a decade age we moved (back) to Dallas and tried to insure our house $1M+ house with our long-time insurer. They balked because of the high cost of the home and at some point it because clear to me that the person I was speaking to just didn't understand that the house itself wasn't anything crazy expensive...most of the value was in the dirt. After much trouble on my part, they finally transferred me to a different person who finally understood this point and they insured the house with no issue at all.

[Seguinite]

Seems like a helluva lot of area homeowners should be seeing this. $1.4m can't be an oddity in the Dallas area.

[EDS_]

OP do you know the FEMA flood zone designation of that house/lot in question?

[tcualum]

Originally Posted by JONOV

As would most houses built in 1994.

That's the question though...is the home $1.5 million because it's a highly desirable neighborhood, or is it $1.5 million because it's a 6300 square foot home?

My home is worth what it's worth because it's in a desirable neighborhood (most homes sell before they go on the market), has high end finishes, relatively large lot size, and because of its square footage. The appraisal district claims it's worth 50% more than we bought it for.