Real Estate and Home Mortgages - Bumping Insurance

I believe I need to bump up my insurance coverage on our home.

We bought the house in 2002 for $50K. At the time the market was flooded with properties. Today our town of approximately 1000 is 'booming' and houses half our size, age and with nothing near the character are selling for over $100K. It's really hard to get a clear market value of homes because there are so few available. Homes of about 3/4 the size and around 20years old have gone for 140's....some a bit bigger and newer are sitting at $300-450K.

Ours was originally built in 1910 and had some additions in the 30's. It's 1700sqft, oak / fir hardwood floors throughout, wide fir trim everywhere (8" baseboards), solid fir doors, etc. etc. I have restored myself (carefully and precisely) approximately 80% or so of the house to it's original state, adding insulation and other conviences, spending $24K and change on materials and thousands of hours of labour (4K I would say)...see some of my DIY projects on this website.

We had our insurance bumped to $125K a couple years ago but I am thinking that today to rebuild it as we have restored it so carefully would have to cost at least $300K given the amount of wood and trim detail etc. I would guess that even without any of the renos our house could go for anywhere between $150 and 180K.

Will an insurance company normally just let you bump it up to any #? Do I need a professional appraiser? Anything to look out for when getting one? ALso, would it be wise to renegoitiate a mortgage given the value of the house has increased? I have some reno debt but most of it sits on very low interest credit cards with indefinite 4.9% rate.

TIA

Darren

Darren,

The amount of property insurance you carry on your home would relate to the cost of construction, not home selling prices.

Here the insurance company can establish a cost to rebuild by giving them a description of the size layout and any extra goodies your home may have.

Just contact your insurance company and they will know what to do.

I wouldn't refi if the cards are at 4.9% and I'm also not a fan of increasing the size of the mortgage to pay off credits cards anyway. Contact your insurance company and tell them what they told us - they'll want to have an accurate value on the home so they can bump your premium.

Some insurance companies have an in house appraiser they will send out to verify the value for insurance. If you just get more insurance and the house isn't worth what you insure for, most ins co.s will only pay what the claim is worth and refund any excess ins premiums.

And don't forget the property itself won't burn down. Only the house. You only need the cost of building the house not the cost of buying the property also. Also most basements survive fires.