Insurance Value vs. Market Value

November 29, 2012 at 9:08 AM | Posted in Home, Insurance Policy, Personal Insurance | Leave a comment
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The amount you should insure your home for can be very different from the market value determined by your Real Estate Agent or the value determined by your town for property tax purposes. These can differ because the market or tax value is a depreciated value, while the insurance value is a replacement cost value figured on today’s inflated rates for materials and labor. The insurance value also includes things that an appraised value won’t such as estimated costs for debris removal or the cost for code upgrades to undamaged portions of the home required by the town after a loss. In addition, unique features such as ornate or custom materials could also increase the insured value.

Insurance companies estimate the replacement value of your home based on many factors and will adjust the amount of coverage if necessary. If your home is not insured for the replacement value at the time of a loss, you will be subject to a co-insurance penalty and will incur out-of-pocket expenses.

Due to the increasing costs of labor and building materials in this economy, it is important to review the replacement value of your home every few years. If you have any questions, please feel free to contact us at 888-850-9400.

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