My home insurance policy shows I am insured for $225,000 but my tax assessment is only $150,000. Why are the amounts so different?
Most often homeowner policies are written on a replacement cost basis. This provision is applied so that you can replace or repair your home after a covered loss. Tax assessments do not account for labor and material costs to reproduce your home.
The opposite can also be true. For example a home with lake frontage has more value. Therefore a property may be assessed for $300,000 but the dwelling may be rebuilt for $150,000.
I bought my home for $150,000 but the insurance company said I have to insure it for $200,000. Why is the insurance value different from the real estate price?
Real estate market prices do not consider replacing your home after a loss.
*** For both of the above questions, please note replacement cost values are determined by using a standard square footage calculation. This will determine a re-build or replacement cost amount.
I built my home last year and it cost me $325,000. The insurance company immediately told me at my renewal it was worth $340,000. How could it appreciate that much?
New home building is more cost efficient than re-building. The increase of coverage is applied to account for inflationary increases as well as costs for debris removal and temporary structural work to prevent further damage after a loss.
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CHANLER AGENCY, INC.
Disclaimer: The Chanler Agency, Inc. is using this website, www.chanleragency.com, for the purpose of soliciting insurance in the state of New York.