What's the deal with Replacement Value?
I was just doing some due dilligence on a proprety and I spoke to my Insurance Company (USAA), and had a mild heart attack when they told me how much it would be to insure. 1st I ran it online and it came to be ~$6k/yr. I called because I swore I did something wrong, but the most she could do is halve that number. That's still $250/mo with a 10% deductible!
I digress, a little about the house: It was built at the end of the 1800s. It has been uninhabited for at least the last 5 years, probably 10. It sits in a nice neighborhood, but the houses are going for only $250k (they are all old and have been rehabbed in the last 10 years).
She quoted me that replacement value was $630k! How the hell did she come by that number? The City has it assessed at less than $50k. She mentioned that they would have to source materials identical to what is there now. Well if the house burns down.. I dont want that old *** house with knob and tube, plaster walls, and single pane windows... I want modern building practices. I'd take a $200k check and I would still say thank you.
I tried saying to her... well I wont replace it with a $630k home. I wouldnt be totally sure I would rebuild there.
How do I get this insurance down to a reasonable price?