An insurance company values a home primarily based on replacement and repair costs of a home. There are a variety of other factors that impact an insurance company’s valuation of a home which we are going to delve into here. Understanding your home’s value is important to understanding your insurance coverage and even your resale value.
Ways Homes Can Be Valued
There are a wide variety of ways a home can be valued and they are all based on specific factors. For instance, the area surrounding a home can severely lower a homes value even if the sum of its part is much more expensive. A mansion built in the slums is less valuable than a mansion built on a hill in a beautiful countryside. So a few ways homes can be valued are:
- Appraised Value
- Fair Market Price
- Replacement Value
- Cash Value
- Assessed Value
- Taxable Value
- Reconstruction Costs
There are other ways to value your home, but these are the primary ways a home is valued.
Factors That Determine A Home’s Value
As mentioned above, the location of a home can have a large impact on its value. An insurance company takes into consideration a wide range of factors when determining the value of your home. This value is not an appraisal value but it looks more closely at the value orr rather cost of replacement as well as the cash value of all the separate assets of the home, the risk of damage to the home and other factors. This is why car insurance varies, the make and model of a car impacts coverage costs just as the make and model of your home impacts coverage costs.
Below are a few of the key factors that go into determining the value of a home by your insurance company:
- The age of your home.
- The size of your home.
- Where your home is located.
- The present condition of your home.
- The cost of building supplies to repair your home.
- The cost of similar homes in the area
There can be other factors like local crime rates. If an insurance company knows based on data that they will have to regularly replace windows and door frames as well as stolen property from local crime and robberies, you may see a slight increase in your home insurance rate. The changing economy also plays a major role in your home’s replacement cost. The cost of lumber now compared to 10 years ago is drastically different.
Two Home Values That Impact Insurance
There are two common home values that determine an insurance company’s home valuation. An appraisal value which is typical performed by an independent appraiser. They will look at everything listed in the above factors used to determine the value of your home. The other valuation of your home is your assessed value. Assessed value is typical performed by your local government for tax purposes. This assessed value largely takes into consideration your neighboring properties and the home values within your area.
Contact Strickler Insurance For Home Insurance
At Strickler Insurance we seek to provide home insurance for your home that will protect you and your family. Being under insured is a terrible situation to be in and we never want our customers to be without a home. Contact us for a quote on homeowners insurance.
