House Fire
You are almost always better off rebuilding the home, even if all you do is resell it. Insurance companies are pretty savvy when it comes to this stuff, and while I'm not saying you are looking at fraud, not rebuilding is a fraud redflag. Also, if it's in an incorporated area, you may not have a choice from the city/county. Also, any policy which covers 'full new replacement' coverage, only covers this if the repairs / rebuild are completed. If not, they pay fair market value (again, this helps them avoid a fraud problem). 800 sq ft house, $150/sq ft to rebuild = 120000 total loss. 80% of the $120K loss is 96K, so you clear the 80% hurdle. The insurance company will pay the contractor upon invoice submission, and then square everything up at the end. Anything over $100K is up to you to cover (unless you have extended replacement coverage). Of course, your deductible comes into play as well. Let's assume a $100K loss and you don't rebuild. It costs about 20% less to use old wood (i.e., what the house was currently built out of instead of new wood). Total claim would be somewhere between $75K and $80K. Out of this, the insurance company will pay the mortgage company and then give you the balance (minus any deductible). Just a word of caution. Insurance companies don't mind repairing/replacing stuff. It is what they do. Despite some opinions to the contrary, it is actually what they get paid to do. They do have an issue when someone walks away with more money in their pocket after the loss than before the loss (i.e., a betterment). This is why not rebuilding is a problem for insurance companies. It raises suspicion on why the place burned.
