Our house burnt to the ground on April 18th. We had replacement coverage on the house for $181,000.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Oct 14, 2013

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Insurance Question from Kellerton, IA

Asked on 10/14/2013

Our house burnt to the ground on April 18th. We had replacement coverage on the house for $181,000. The insurance adjuster is now telling us that we were over insured and they are only willing to pay around $136,000. They said we should have known we were over insured and since we did not agree they have invoked their right to hire and appraiser. How can they not pay now that we have nothing left to appraise??

Answer given on October 21, 2013

Homeowner insurance policies insure your home for the estimated replacement cost of the home. This figure is determined in various ways. Some insurance companies use programs to estimate the replacement cost, some send out inspectors and some use a flat cost per square foot.The homeowner policy is written to pay that replacement cost, up to the policy limits of the policy. If you do not have sufficient insurance coverage, then you can be out a significant amount of money. Many homeowner policies include an increased coverage of 10% or more to increase if they were low in the replacement cost. However, if your home is over insured, the insurance company is usually not responsible to pay you the policy limits.You need to review your insurance policy to see how it reads. There are a few insurance companies that will pay the policy limit, even if the home is over insured. However, this is a rare policy. If your policy says it will pay the replacement cost or policy limits, whichever is less, then you do not qualify for the additional coverage amount from the policy.

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