Insurance company won't insure my house

Oh man I really love this... the wife and I just bought a mini farm out in SE Kansas nice place 4,200 sq ft 4 bed 2 bath 6 acres bought at a foreclosure sale for 12 grand..paid cash for it... yeah it needs a little work new kitchen cabinets stove fridge little things... but its one heck of a deal right....

Well today I thought to get an insurance quote for the new place... I can do that online, you all know how that works... well the company is progressive been a customer of theirs for years, and to be fair I only wanted a $20,000 policy for now... even if the replacement value is closer to 60... guess what I got as an answer

Thank you for Requesting a Quote Unfortunately, due to our underwriting guidelines we are unable to issue a quote at this time.
We are unable to insure homes whose replacement cost is considerably higher than their market value.
We apologize for the inconvenience

no wonder their not selling houses you can't get insurance for them any more...and somebody please tell me how a $20,000 policy is considerably higher than their market value?

The insurance companies in general are evil imo. I had the worst experience dealing with my disability insurance company over a short-term claim. They can't get away with this. It has to be exposed. Good luck, I hope everything works out for you.

Try a phone call.

Talking to a person often works better than plugging numbers into a script.

That's because you want to insure it for less than it would cost to rebuild.

Find out what it would cost to build your house in that area and that's what your insurance value should be set to.

reply to post by KEMIK


Well thankfully I don't need a loan or I'd be screwed... I'm sure I'll find a small company willing to take my money I just think its ridiculous a national company like this would say no in a time where they desperately need new business

Originally posted by Wildbob77
That's because you want to insure it for less than it would cost to rebuild.

Find out what it would cost to build your house in that area and that's what your insurance value should be set to.

But their rejection said "We are unable to insure homes whose replacement cost is considerably higher than their market value." that sounds to me like they think they can build houses cheaper than 20 grand

You're probably running into problems because the online program is just making calculations without considering the realities. $20k isn't a whole lot more than $12k when talking about a house. But the program probably doesn't know that. It's looking at the percentage, and that $20k is 166% of the market value. There's probably some magic number thaat tells the program to reject an application if you go over it. Maybe it's 150%, maybe 120%, whatever.

Try talking to a real person. Also, I wonder what would happen if you had the house appraised. If it's really worth more, shouldn't that appraisal be ued? I don't know enough about insurance so this idea might be worthless.

Anyway, good luck with this.

reply to post by chiron613


I had an appraisal done 62.5K at current crappy market value "Os" I am being fair and they did not know what I paid for the property only that for a time it was listed at 25, grand,,, before it was foreclosed upon

reply to post by DaddyBare


Well, since you only want to insure for $20k I would think the best thing to do is self insure anyway. Just put a hundred bucks in a new savings account every month and you'll have the $20k in no time. Plus you get to keep the interest, such as it is, rather than having the ins. company pocket it. Just don't spend it.

Originally posted by DaddyBare

Originally posted by Wildbob77
That's because you want to insure it for less than it would cost to rebuild.

Find out what it would cost to build your house in that area and that's what your insurance value should be set to.

But their rejection said "We are unable to insure homes whose replacement cost is considerably higher than their market value." that sounds to me like they think they can build houses cheaper than 20 grand

unable . . .replacement cost . . . . HIGHER than market. You asked for $20K coverage on a house that cost $60K+ to replace. The program will look at this as moral hazard risk. In other words, why would you insure a house for so much less than it is worth unless there is a possibility you are only insuring for the purpose of filing a claim. I don't know how Kansas handles policies but a lot of companies will include guaranteed REPLACEMENT COST coverage in the policy even if the insured value is less. If that is the case, then you would be asking to pay premium for a very low value and getting coverage for a much higher value. Insurance is a business and the premium is supposed to be sufficient to cover the potential loss spread across a group of exposures - i.e. region of the country.

Please talk to a person. If you explain the situation, you most likely can get coverage easily as they will know how to adjust the coverage to match your needs.

reply to post by TXTriker


you are right on the money with this one. since you are only trying to get a policy on a third of the value, it would not be prudent because if a tornado comes through destroys your asset of 60 grand, you are only insured for 20,000 and are at a major loss. if you own this house outright and whether there is a mortgage also is a factor in this but to a lesser degree. they are not issuing a policy because it would automatically put you in a default situation should something unfortunate happen. lenders will cover their ass and contract liability insurance into the loan and it is usually included in the monthly payment, and since they usually set the standard operating procedure rules and regs the insurer sees this as a "unique" situation they would rather not deal with.

edited to remove most of the dereliction

[edit on 20-11-2009 by Jnewell33]

As others said, TALK to an agent, and get a real quote.