Home House insurance - market value 100k, mortgage 200k

Cumulus

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In a situation where the market value of the house is 100k but the outstanding mortgage amount is 200k - for which of the two amounts should the house be insured?
 
Well... Would the rebuild cost not be in the close neighborhood of the market value?
 
problem is though, lender might insist on minimum sum insured as amount owing on mortgage
 
lets disagree then. They have done so in the past. You say that they don't 'normally', indicating that you agree with me. I did cover myself with the word 'might'.
 
lets disagree then. They have done so in the past. You say that they don't 'normally', indicating that you agree with me. I did cover myself with the word 'might'.
Don't agree with you. I put in "normally" as there might always be some exception.
However, with a standard house and standard mortgage, the sum insured for house insurance is rebuilt value and not amount owing on mortgage. Of course, people might add contents to the sum insured. Again, nothing to do with the mortgage.
Not sure what the point would be to insure for the mortgage amount to be honest.
 
No. Standard mortgage means that lender wants their interest protected.

Can we agree that there might be exceptions?
 
No. Standard mortgage means that lender wants their interest protected.
Can we agree that there might be exceptions?
Can't even see what exceptions would require to have a home insurance cover beyond rebuilt costs. What would be the point for that in your opinion?

According to Wikipedia - which is the same for Ireland:

[...] mortgage lenders within the UK require the rebuild value (the actual cost of rebuilding a property to its current state should it be damaged or destroyed) of a property to be covered as a condition of the loan. However, the rebuild cost is often lower than the market value of the property, as the market value often reflects the property as a going concern, as opposed to just the value of the bricks and mortar.

I have yet to see a mortgage contract that states that your home insurance must cover the mortgage costs, usually states "adequately" insured. Of course, I haven't seen all of them.
In any case, nobody hinders you from insuring your house beyond reinstatement value. It is of course a waste of money generally speaking.
 
What would be the point though of over insuring your house for the mortgage amount rather than the rebuild cost? Don't the insurance companies just pay for the rebuild, I didn't think they just paid out the amount insured.
 
Crossed wires here in my view...people mixing up mortgage protection and house insurance.

You couldn't over insure and cover more than the rebuild cost. The insurance company wouldn't pay out.
 
Bank of Scotland placed a stated house insurance sum on my house. It far exceeded mortgage owing at the time.

Marion
 
Exactly, the house insurance figure has nothing to do with the mortgage figure, it relates solely to the cost of rebuilding the house whether you owe 10k or 500k
 
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