insurance

[stirling]

I have purchased 2 x 3 BR semi's ex State housing, solid brick in a country town. 100's in the area. Purchase price $50,000. Land value is estimated at $5,000.

Insurance companies assessment of replacement value is $150,000.

Possible Scenario: Total destruction of 2 x semi's by fire.

Insurance Company would pay out $150,000. However I could clear the block, sell the block and buy the 2 x semi's next door all for $50,000.

Question: How much do I need to insure the property for?

 

[Rolf Latham]

Hi Stirling

I would go for replacement value.

Some have intimated that the fastest way to capital growth in this sort of situations is 20 Litres of petrol and a book of matches, because commonly the lender wants full replacement cover for something barely worth 1/3 of that.

Ta

rolf