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If I have property/land for sale at a higher value than that which it was purchased can I insure against the selling price? Say my family home that has sentimental value above the retail value and I don't want to accept more than it is worth personally to me. Maybe my ex-wife will try and burn it down or the garbage men's brakes fail and their truck destroys the front of my house whilst it is on the market. Can I cover against what it is worth to me to bother selling?

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Insurance on an item covers what it costs to replace that item. If it is to go beyond the replacement costs, there must be an appraisal to explain that additional value.

For example: t-shirt with team logo $50. Autographed by famous athlete $500.

But that appraiser has to be an expert in that field. You can't just claim sentimental value: priceless.

In your case the insurance company is only interested in how much it will take to rebuild the house. They aren't interested in insuring the land, because it takes a much larger event to destroy the land. The only way to go beyond replacement costs, is to have historical significance to the house.

They don't care what you have it listed for, because that may not be grounded in reality. It may cost $100K to rebuild, but you want advertise it for $500K because you really don't want to move. The fact you accidentally burn your house down shouldn't put an extra $400K in your pocket.

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It is not impossible to get insurance which will (theoretically) pay what you think it's worth rather than what it's actually worth. But then you'll pay premiums appropriate to that higher number. AND you'll have to go to insurance companies which handle non-standard policies, which will further increase the cost. AND they're going to be far more stringent than anyone else in attempting to prove that you were responsible for the fire or whatever, since they're going to assume there's a high risk that you're attempting insurance fraud.

Basically: Sure, if you try hard enough you can find someone who will do this. You probably can't afford it. You're certainly foolish if you try.

Quoth the Devil's Dictionary:

INSURANCE, n. An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table.

That is, in essence, correct. Insurance is essentially a gambling game with the odds stacked heavily against you. The only reason to play is that it allows you to distribute your risk over time, so if something happens early you're covered... but then you have to stay in the game because you've spent the money that would otherwise have gone into self-insuring.

  • They may issue the policy, but the value listed there is the maximum value, not the definite value. In the end - the payout is for the actual replacement costs. – littleadv Oct 4 '14 at 3:49
  • Again, depends on the policy. Consider performers who insure their voices -- there isn't a good way to assess that, so there is a value agreed upon at the time the policy is issued -- and the cost per dollar of that value is higher than a normal policy because the company will pay out in full. As I said, this is a special case and it's processed as one... and unless you're insuring something which has extremely high but ill-defined value, you do not want to consider going that route because you can't afford it. – keshlam Oct 4 '14 at 15:27
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    (Insurance is a gambling game. You can find someone who will take any bet... but there's no promise that you'll like the odds, and it's guaranteed that the odds will be in their favor. In fact, that's what Lloyds of London really is -- a clearinghouse for finding someone who will write a nonstandard policy.) – keshlam Oct 4 '14 at 15:41

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