http://caare.org/forum/ Consumer Advocates in American Real Estate en Tue, 07 Sep 2010 02:00:55 +0000 http://caare.org/forum/topic.php?id=4#post-6 Sun, 26 Apr 2009 12:30:46 +0000 DBBUM 6@http://caare.org/forum/ <p>I understand the insurance companies have been operating for years with their standard methods of operation. I see what I consider major defects in their methodologies.</p> <p>If a person purchases a home, they are required to pay insurance based on what the insurance company deems as "replacement cost". The value of the home is decided by "fair market value" which is determined by what a potential home buyer would pay for a house.</p> <p>Therefore if a person tells a real estate agent they want to make an offer on my house that is substantially higher than the real value, it is then necessary to get an appraiser that will agree that the house is worth that much money. Now it comes to the loan on the house. Getting the bank to go along with it is the next step.</p> <p>If all this all falls in line, although it may take several steaks and scotch to get ''er done, my "fair market value", "replacement costs, and property taxes all skyrocket as well as my neighbors.</p> <p>A person is required, and rightfully so, to protect the mortgage company who loaned them the money to purchase their home. </p> <p>Unfortunately, the insurance companies who have no investment in the property in any way, shape or form are allowed to set (almost totally arbitrary) whatever they see fit.</p> <p>This is grossly unfair because a homeowner who has a house that cost $150,000 and owes $25,000 on the mortgage is still required to carry the same amount of coverage that a person who purchased a $150,000 property and owes $120,000 on the property.</p> <p>Insurance should be set up in a manner that would allow the homeowner to set a selected amount of insurance. Mandatory rates should only include the amount of<br /> money that the mortgage company still has invested in the property, and the homeowner should be able to select the amount of insurance desired over the mortgage. For example, the homeowner above who owes $25,000, but wants to insure the property for a additional $25,000, should only be required to pay for the amount of mortgage debt plus $25,000.</p> <p>My insurance and taxes are currently governed by people who "guess" what my property is worth and "guess" how much it will cost to replace it! It's long time overdue to re-structure the insurance industry. </p>