One of the most common questions we get when writing policies for homeowners and other types of property owners is "...how did you come up with that number to rebuild my house.."? Part of the problem is that there are so many values people encounter related to the property they own. Four of the most common values are:
- Market Value - Used by realtors as a calculation of a home's worth for buying and selling.
- Appraised Value - Value used by appraisers (often in new purchases and refinances) to calculate the worth of both the home (structure) as well as the value of the land it sits on.
- Tax Value - Calculation used by a variety of municipalities to determine the rate and basis you will be taxed for the property to you own.
- Reconstruction/Replacement Value - Used for insurance purposes to calculate the cost of possible demolition, materials, labor and partial or total reconstruction costs if a home is damaged or destroyed.
While there are other values that can be described these are generally the four most commonly confused. To add to this witches brew of valuation is the fact that these four figures rarely match. This often leaves property owners mystified over which figure to trust. The answer is you can trust them all to a certain extent. It just depends on who is calculating the value and for what purpose. Over the next few days I will list 10 things that go into evaluating a home or property as it relates to insurance (#4 listed above - Reconstruction/Replacement Value).
We look forward to hopefully "de-mystifying" this topic for you and as always encourage you to submit any topics you would like to see discussed anytime to
info@dardenmiranda.com
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