fire loss

[Billie]

My home was destroyed by fire Dec 17, 2002. Now they are telling me the replacement cost will not pay off my mortgage. I do not want to re build where I am at and would even like to sell my land, with cement, fencing, slab, etc. My mortgage is 121, 000 and my home was appraised and insured for 155, 000, why does the insurance not cover the mortgage, my home is 3 yrs old.
All advice and information is helpful and appreciated.

[camel]

You are probably a resident in an actual cash value state, meaning, the insurance pays the replacement cost of the home at market value. Market value is likely determined by market surveys, NADA values and comparable sales of like kind and quality of home.

[rmurray]

There is another possibility...The insurance only covers the home......not the land, land improvements and other things that might well be in the loan...
The poster mentions that he has replacement cost...In this case the insurer will buy and replace the home on the same plat of land...If you opt for a cash settlement...it will be done on an ACV method like you described...The rub here is that somehow the poster expects the insurance company to give him free and clear land and improvements....I am sure they will not..

[chris moran]

To make this work for you do the following.

Replace your home on the existing land with the maximum the company will provide which basicly is a new home of equal value or more to the point a new home of the same size and make with the same features.

Then sell the package to pay off the mortgage.

Insurance (replacement cost) only pays to rebuild and does not pay off a mortgage like you would expect on a car loss.