This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Buying Instead Of Rebuilding After Disaster

After you've lost everything in a disaster, home insurance helps you pick up the pieces and rebuild.

But what if you'd rather buy another house somewhere else?

You file a home insurance claim, sell the lot, buy another place and move on with your life. That might sound easier than the painstaking process of rebuilding your house from the ground up, but it comes with its own set of complications.

"You have to prove what you're entitled to," says Greg Raab, a National Association of Public Insurance Adjusters board member and manager of integrated services at Adjusters International in Utica, N.Y. "You have to dot your i's and cross your t's. It's not as simple as showing your receipts."

Whether you can use the full replacement cost -- the amount it would take to rebuild your home -- to buy a comparable house is not a surefire option, except in California, where a state law expressly gives consumers with replacement cost policies that right, says Amy Bach, executive director of United Policyholders, a consumer advocacy group. But even so, confusion and disagreements arise even in California.

"The big hole people seem to fall into is they can't reach agreement with the insurance company on that theoretical value [to rebuild]," she says.

Here are some of the questions that will arise if you're thinking about buying instead of rebuilding.

Do you own the home free and clear?

Any settlement will be made to you and the mortgage lienholder if you still owe money on your home. If the settlement is large enough to pay off the mortgage, then that portion goes to the lender and you keep the remainder for a down payment on another house.

"If the settlement is not enough to pay off the mortgage, then buying another property is probably off the table," Raab says.

What does your insurance policy say?

Most home insurance policies provide replacement cost coverage for the dwelling. In fact, a mortgage lender typically will require the homeowner to have replacement cost coverage, says Ronald Reitz, president of the National Association of Public Insurance Adjusters and president of San Diego-based Quality Claims Management Corp.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.19 -0.46%
FB $118.07 0.01%
GOOG $699.26 0.51%
TSLA $212.32 -4.60%
YHOO $37.10 3.10%


Chart of I:DJI
DOW 17,694.78 +43.52 0.25%
S&P 500 2,055.41 +4.29 0.21%
NASDAQ 4,732.6950 +7.0560 0.15%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs