Excessive Homeowners Insurance has little Value for Owners.

Owners have the law on their side.

One way for homeowners to tell if they are being asked by a lender to carry excessive insurance is to find out how much it would cost to rebuild the home.

A free on line resource is www.building-cost.net , where the publisher of the National Building Cost Manual has created a thorough calculator that enables users to compute house construction costs in various cities.

Also, talk to a few insurance agents. Instead of telling them how much insurance the lender is required, start by asking how much coverage is needed. The insurers should give an accurate assessment of what it would take to rebuild.

If a lender demands a home be covered for more than its replacement value, show the mortgage company a copy of section 2955.5 of the California Civil Code, which clearly states that this is illegal. The code can be found at http://leginfo.ca.gov/calaw.html . Click the box next to “Civil Code” and in the search box at the bottom of the page type in “2955.5″

Consumers unable to resolve the issue with the lender can file a complaint with the California Department of Corporations. The department can be reached at (866) ASK-CORP. Complaint forms are available on line at www.corp.ca.gov/comp/complist.html or www.corp.ca.gov

Another option is to contact the Better Business Bureau at (909) 835-6064 or www.labbb.org .

This article is from Evan Halper, who wrote this article in the Real Estate section of the Los Angeles Times Sunday edition, dated April 24, 2005.