| Well, of course you can't insure land on a Homeowner's policy, you say! But it is not uncommon for mortgage lenders to request Homeowner's insurance limits to cover 100% of the loan amount, even if it is well in excess of the replacement cost of the home. The mortgage lender wants to make sure that if the property is a total loss, they will be insured and paid the full amount of the loan. That makes sense from their perspective, but for many reasons, insurers do not want to insure a property for more than 100% of replacement cost. During the 2024 Regular Session of the Louisiana Legislature, Representative Brian Glorioso, a Republican from Slidell, Louisiana, addressed this issue with Act 600, HB 144. HB 144 by Rep. Brian Glorioso §1339. Homeowners' insurance; prohibited coverage of unimproved land “An insurer shall not deliver, issue, or renew any Homeowner's insurance policy providing coverage for loss or damage to improvements upon immovable property that includes the value of the unimproved land in the coverage limits." Although this is a commonsense underwriting fundamental for Homeowner's insurance, this statute may be helpful for IIABL member agents who receive requests for coverage limits in excess of replacement cost. When mortgage lenders pressure your customer to increase coverage limits beyond replacement cost, you can advise your customer to advise the lender that it is against state law to increase coverage beyond replacement cost.
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