Home Value Protection Insurance

[ljbab728]

This is an interesting concept that I've never heard of before.

http://newsok.com/home-value-protect...rticle/3651095

It's a little surprising that Oklahoma is the second state where this is being offered since we probably need it far less than most states. If they had started offering this 10 years ago in Nevada, Florida, Arizona, and California they would probably be bankrupt now.

[SoonerDave]

This is one of those closing-the-barn-door-after-the-horses-are-gone notions. Rest assured they're not selling these policies because they think money is to be lost.

Let's work out an example: Home valued and insured at $100,000 in Feb '12. Suppose the house depreciates (for whatever arbitrary reason) to, say, $90,000 in Dec '12 (presuming a sale or something fixes the value). So I've lost $10K, which is under the 25% cap - but my deductible is 10% of my insured value for two years. That's $10K. So my net payout? Zero. And they've kept all my premiums.

Methinks this probably not an optimal idea, unless I've just missed something. Wonder how you underwrite something like this, because a huge, wholesale downturn would seem likely to bankrupt such an enterprise...