Check with your agent, as there might not be a big difference in premiums. If not, just leave it because if you have to every replace, the price of the materials and labor could eat up that difference.

Typically, in the event of a loss, replacing your home including demo and debris removal costs much more than building new. In some areas the replacement cost way way exceeds market value. In addition, often your insurer tells you what the minimum they are willing to insure you for. When there are big catastrophies, you never hearon the news that the people had too much insurance. It's usually the opposite.

"I think my home is worth about $150k"

If your home is worth the market value of $150k with the land, subtract the value of the land and insure only the structure. Take into consideration todays cost of rebuilding a similar home.
Your insurance agent should be able to guide you to what's reasonable insurance of a home with renters in it, including it's liabilities.

YES. You need to call your agent TODAY and get your policy changed to cover renters. Chances are, if your house burned to the ground today, insurance would not pay because your current policy is not set up for renters.

As far as the home value, the insurance carrier has a formula for what it costs to rebuild the home in the event of a total loss. They use this formula, based on square footage and such of the home. it has nothing to do with the current market value for selling the home. But this is a moot point, considering your huge issue at the moment is that you need coverage for the home being used as a rental home. Also, if you plan to be vacant in March(?), your insurance likely has issues with it being vacant, so make sure you have coverage for any vacancy periods too.

Just know that you can be paying your premium and think all is fine, but if you have a loss, that is when they check for discrepancies(is it vacant, used as a rental, used commercially, etc?), and then deny the loss if they can legally get away with it.

Sweet Tea's advise is very good, many policies have exclusions if the occupancy type is different than what you said on the application. Almost every policy excludes almost everything if the home is vacant for over 60 days.

berniek's advise, while well meaning isn't remotely accurate.

The bottom line is when you buy insurance, you are buying a contract. It is very important to understand what is in the contract. Read your policy.

FYI - this is what I do for a living (since 1988), so it is not random info.

"berniek's advise, while well meaning isn't remotely accurate."

Please educate me.

sweet-tea, when we went to a rental, we switched to a landlord policy which would address the issue you mentioned regarding renters. And as far as it being vacant in March when we list it for sale, our renters are actually staying in it while it's up. However it's good to know that there may be concern about vacancy at some point. Thanks!

"If your home is worth the market value of $150k with the land, subtract the value of the land and insure only the structure."

Actually as I re-read your post, what I was reacting to was the implication that the insured value is connected to the land + home value. Value is the word that is vastly incorrect and completely changes the meaning. Replacement COST is what consumers need to be aware of. What your home is worth on the market has no connection to the insurable replacement cost.

I apologize for not being clear.

stretchad, call your agent and tell them you are renting the house out now.

There is a major difference between primary residence and a rental, if you expect coverage you need to change it right away.

If you have a mortgage on the house, that is another thing. Then there is the tax difference between primary residence and a rental.

No matter how much you like or trust your tenant, if they slip and fall or burn your house down, insurance will be involved. All they have to say to your insurance is that they rent and your coverage will be dropped in a heart beat.

gammyt - I already have a landlord package on the house. My insurance company has been aware that it's been a rental from day one. I had posted an update two posts above yours.

Kailuamom - I figured that the replacement cost wasn't really tied to the 'value' of the home. But, other than relying totally on my agent to calculate the replacement cost, I don't really have any other way to get at what the replacement cost of the house would be. I just want to make sure that I'm not paying for too much coverage. My gut reaction when I reviewed my coverage recently was that it was high, which is what prompted the post.

If you want to get an estimate of the replacement cost you could call some contractors and ask what the cost per sq ft is averaging in your area for a gut remodel or fire remodel, including demo and debris removal.

Here's the thing though, usually your insurance policy provides an endorsement that will cover you if the replacement cost actually exceeds your limit. They only allow that endorsement if you use their value.

Working in the industry for many years, I will tell you that people often have inadequate coverage, not the other way around. There are more law suits blaming either the agent or company that the house couldn't be rebuilt within the limits.

You are insuring the 'improvement' (house, barn, whatever) that is ON the land. I don't know if there is any 'land' insurance -- California hillside lot slides away? Sink hole eats house AND lot? Old mine tunnels collapse? Galveston coastal lot is covered by higher tide line?

You need coverage for what it would cost to rebuild TO CODE.

Usually the policy's coverage of contents is a percentage of the overall structural coverage. I don't know how that works for an *unfurnished* rental. Seems the landlord shouldn't be paying to cover the tenant's furnishings -- only appliances.

"Old mine tunnels collapse?"
We actually do have insurance for that.

Here is a link that might be useful: Mine Subsidence Protection Program

A fire dwelling policy is what you would use for a rented out property. This type of policy does not include contents at an automatic %, rather added at a selected limit. For instance, I have $10,000 to cover my washer, dryer and frige. You also add rental income to that policy. You want to make sure you have coverage for 12 months. Most polcies limit you to that time period.

Most policies have liability coverage for the land, so if your lot slides and hits someone elses house, you would be covered. However in the event of that same land movement, your own house would NOT be covered (unless you bought a specific policy covering earth movement).