quote:

---

Originally posted by freespirit

Thankyou - I understand more about why lenders would require replacement value.

So Hawaii insurance does not offer homeowners to select their coverage amounts? Meaning if I pay off my home and only want enough insurance coverage to cover the cost of what I paid for the Land/house that I could not opt to do so?

A Homeowner is forced to cover in full replacement value period even if they own the property free and clear?

I have never heard of anything like that before - I realize Hawaii in a sense likes to do things differently but to me that sounds "Like where is the land of the Free and the Freedom" that our country was built upon? I must be misunderstanding you on that part.

I also don't understand lets say a 1000 Sq ft home they do a flat rate times sq ft to calculate the coverage then times that by a certain amount (goes up only slightly based on age).

Lets say Mr. Smith his 1,000 Sq foot home is only a couple years old and and his loan balance is $150,000. And they calculate his insured replacement value at $189,000. Premium about $2100 per year. Mr. Smith paid $175,000 for his home.

Then Mr. Peterson buys a home 1,000 sq foot home and his loan balance is $20,000 and the sq ft. but that home is 40 years old very modest/basic built home and is calulated only slightly lower by X$ amount per foot and they calculate his insured replacment coverage needed would be $173,000. Premium about $1900.00 per year. Mr. Peterson paid $60,000 for his home.

This would mean both Mr. Smith and Mr. Petersons insurnace premiums would be only slightly different? According to the couple Insurance agencies I talked to the coverage amount would only be slightly higher for the new house like $10 more per sq ft. making the premiums only like about $100 per year difference for the new house versas the old one. What if either Mr. Smith or Mr. Peterson own their homes and would opt to not rebuild should their homes be totally destroyed. Would they have to rebuild? would the insurance carriers not give them any pay out unless it was to rebuild should it all be destroyed? Can a home owner choose to not have insurance on the house part but just get insurance for value of their belongings?

Sorry just trying to understand how it works is all as I have never heard of any place in the USA that forces a certain coverage on homeowners. So if you own the property you can either choose "no Insurance" or you can only be covered if you opt for full replacement value? [?] Or am I understanding it totally wrong (which I hope). I would think insurance agencies would all go broke doing it that way.

Thank you for any input.

Laurie

---