What should the $ amt be on a forced policy ?

[sburton712]

What is the name of your state? FLORIDA
My mortgage company has a "forced" insurance policy on my home due to the fact that I have been unable to find my own coverage. The amount they have insured it for is about $20,000 more than the owed amount of my mortgage. When I asked about it, I was told that the amount of the policy is determined by the replacement value of my home. I say this is wrong, and that they should only be allowed a policy in the amount that I owe them, since they are ultimately the ones that will benefit from this type of policy. The amount that I owe them at any given time is the balance due on my mortgage, not the replacement value of my home. Can I force this issue with them ? This forced policy is very expensive, and has been added to my monthly mortgage amount, so I want to keep it as small as possible.

 

[moburkes]

What is the name of your state? FLORIDA
My mortgage company has a "forced" insurance policy on my home due to the fact that I have been unable to find my own coverage. The amount they have insured it for is about $20,000 more than the owed amount of my mortgage. When I asked about it, I was told that the amount of the policy is determined by the replacement value of my home. I say this is wrong, and that they should only be allowed a policy in the amount that I owe them, since they are ultimately the ones that will benefit from this type of policy. The amount that I owe them at any given time is the balance due on my mortgage, not the replacement value of my home. Can I force this issue with them ? This forced policy is very expensive, and has been added to my monthly mortgage amount, so I want to keep it as small as possible.

You cannot, and should not attempt to force the issue. It has nothing to do with the balance, just as the policy that you would buy would have nothing to do with the balance. In a partial loss, if you aren't insured for at least 80% of the replacement cost, the insurance company isn't going to pay the claim. Period. No coverage. In a complete loss, you will need to be able to rebuild your home. Without replacement cost, you won't be able to.

 

[sburton712]

So if I were to have a total loss, the mortgage company would be paid off for the balance due, and I would receive the difference ? Thereby getting back some of huge dollars the policy cost me ?

 

[moburkes]

So if I were to have a total loss, the mortgage company would be paid off for the balance due, and I would receive the difference ? Thereby getting back some of huge dollars the policy cost me ?

No. It does not put cash in your pocket. The money goes to rebuild the house to its pre-loss condition, only better, since it will be brand new. You will still have a mortgage to pay, but, will be living in a brand new house.

 

[sburton712]

My home cannot be rebuilt to it's pre-loss condition; it's a historic building. And I have other property on which to live. So why couldn't the proceeds go to pay off the existing mortgage only ? The equity is in the land on which the house is built, not the house itself. I would sooner rid myself of the mortgage.
Please understand that I know that replacement cost is the usual way, but this policy is costing me a ridiculous amount compared to a policy I purchase (if I were able to find one in the State of Florida). In this case, the mortgage company is only trying to protect their interest, not mine. I am on the verge of foreclosure now due to my mortgage payment more than doubling due to this policy.

 

[moburkes]

Because that is not what insurance is for. It is to rebuild your home, not to put cash in your pocket. If you don't want to live there, then sell it.

 

[moburkes]

Because that is not what insurance is for. It is to rebuild your home, not to put cash in your pocket. If you don't want to live there, then sell it.

In addition...
You are correct in that they are only trying to protect themselves. You agreed to this when you took out the mortgage. Is it their fault that you cannot find insurance? You should have realized that before you purchased the property.

 

[sburton712]

The property was inherited; the small mortgage was taken for improvements to the home.
No, it's not the mortgage company's fault I can't find insurance, but please don't make it sound like they care whether or not I have a place to live. They only want their $70,000 back. So why should they assume that I want to pay for replacement cost ? 10 years ago when the the mortgage was purchased, the State of Florida was not in an insurance crisis like it is now, so how could I have anticipated this ?

I'm not trying to put cash in my pocket, I'm trying to keep them from taking so much cash out of my pocket.

As soon as I can find a replacement policy, you can bet I will purchase my own insurance. Until then, the mortgage company should only be concerned with getting their money back.

 

[moburkes]

Citizens Insurance.
You're assuming that your house is going to burn down. Why is that? If your house has a $50k loss, how are you going to pay for it, PLUS your mortgage payment?

 

[sburton712]

A partial loss I can understand. You're right, how would I pay for it ? I'm not assuming my house would burn down, especially living in the hurricane state, but fire would be my biggest fear. At least with my own policy, I can have the contents protected.

I'm just trying to get the policy amount to the lowest possible level, at least on a temporary basis. The payment is killing me, and I guess I'm ticked off that apparently I have no choice. I really love how the mortgage company decided what the amount should be.

About Citizens: I'm trying with them now. I had their insurance before, for 2 months, when I got a letter stating that I was being cancelled due to the fact that their records showed I had been offered insurance through another company, "Tower Hill Insurance". Really ? Never heard of em.

Citizens = huge bureaucracy

 

[moburkes]

Your local market decided the replacement cost. And YOU agree to it when you got the mortgage.