A buyer should read the policy very carefully and ask questions that few would think of asking.
For example, if your house is on a concrete slab, the slab is not insured (unless coverage is absolutely stated), so a rebuild would have to be of essentially the same floor plan as the lost house to be able to connect to the water and sewage. Wanting a different floor plan would likely require removing the old slab and pouring another and doing so is at your expense.
