Illegal? or not?

[RednBlack]

I'm not real estate savvy. Is it illegal to insure your house for more than it's worth? Say 4 times the market value?

BTW, I'm not doing it. I wouldn't even know how.

[onefastV6]

Most home owners insurance is written on a replacement cost basis, which based on what it would cost to repair or rebuild your home to "like kind and quality" specifications. It is likely that the carrier will not allow you to purchase coverage over a certain limit... at least a respected one. If you over insure, you will be putting out more money a year in premium that will not be reflected at a time of loss. In other words you are throwing money down the toilet. It is also important to remember that insurance is designed to cover the structure and contents only, therefore the land is not covered on 99% of policies.

[Joseph Upson]

I'm not real estate savvy. Is it illegal to insure your house for more than it's worth? Say 4 times the market value?

BTW, I'm not doing it. I wouldn't even know how.

I don't believe it's quite like life insurance, you have to be able to prove much of if not all of the value insured since it's so easy to insure today and burn tomorrow. Unlike life insurance, claims adjusters get involved so no matter what your property is insured for the final value for a claim will be assessed by an adjuster. It's probably about the same as auto insurance.

[RednBlack]

I kinda figured that. Thanx.

[Juglenaut]

If you have more than one policy on your house that generally are the same, but maybe there are holes where the other policy falls through and the other upholds, this is where a double insurance may help. Where one policy would cover 80% the other may be selected to cover the rest.

Similar to Flood or fire insurance these electives can be augmented to your home insurance and can be from different companies. You can get a main home insurance policy that meets requirements for your dwelling and another that is skinned down incase the other company refuses to pay on some things likecertain collapses and some others etc... The skinned down policy can also be additive to you personal property, if you have lots of expensive toys, jewlery and stuff, then getting another active policy is recommended , and in some cases getting a skinned policy is less expensive than upgrading or increasing you main policy because a different company can be selected.

I get my Home insurance though State Farm and my agent did ask me if I had any form of additional real estate property insurance, I said no then asked why, He said that if I had additional insurances on my property there are options to reduce you main policy cost at an option, or this insurances will only pay out a claim on a qualified item after the other insurance files cost anyalisis or rejection of coverage of said item blah blah...