Insurance Plus Agencies Auto Insurance Home Insurance Business Insurance Life & Health Insurance Motorcycle & Boat Contact Us Commercial Products Personal Products Home Page

Do I Have to Rebuild for My Insurance to Pay?

     Most of the time, homeowner's insurance pays to repair or rebuild a damaged home so its owners can continue to live there as they did before the loss occurred. Sometimes, though, you may prefer to take the insurance money and move somewhere else instead of rebuilding. Several factors determine whether this is possible and how much money you receive.

1.  Mortgage

o    If you have a mortgage on your home, you are not the only owner. Your homeowner's insurance company must represent all the owners, including the lender, on settlement checks. You will not be able to cash any check with the lender's name on it unless the lender endorses it, which is unlikely. The lender has invested money in your home and wants to ensure it is repaired so its investment is secure.

Total Loss

o    If your home is destroyed and the settlement amount you receive from your insurer exceeds the outstanding balance on the mortgage, you may be able to sign the check over to your lender to pay the balance due. If there is any settlement money left after satisfying the mortgage, the lender will issue you another check for your portion. Some lenders may not do this; they may insist on rebuilding the home. You must do what the lender demands.

No Mortgage

o    If you own your home without a mortgage, the settlement money is entirely yours. You may want to repair partial losses to your home to keep it safe and functional and retain its value, but if you prefer to take the money after a total loss instead of rebuilding, you can. Your local government may insist you clean the debris from your old home off your parcel, but otherwise you can take the money and run, so to speak.

Actual Cash Value

o    If you choose not to rebuild your home, you may receive a smaller settlement amount than if you were to rebuild. Homeowner's insurance is settled as actual cash value, meaning settlements are diminished according to depreciation, unless you have a replacement cost endorsement. However, many insurers don't pay replacement cost unless you actually replace the damaged property. Therefore, if you choose not to rebuild your home, you may only get an actual cash value settlement.

By Stephen Hicks, eHow contributor

Posted 3:27 PM  View Comments

Share |


1 Comments

Don C said...
Why would the lender have anything to do about whether I would rebuild a total loss home? They have their money, why dont they just go away. I may want to build a smaller home because my children are gone, etc. Or build a small house for my mother in law, etc. Why is the lender involved?
THURSDAY, JANUARY 17 2013 9:37 AM

Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version


The Hartford