Guide to Home Values and Their Effect on Home Insurance

​It's not unusual for homeowners to ask themselves how much their house is worth. In fact, the value of your home depends on what type of valuation is applied. There are different ways that insurers and appraisers determine the value of homes. Here are some of the types of valuations used as well as who uses them.

Appraised Value
An independent appraiser usually performs the appraised valuation. The appraiser does this when buying a home for the first time. The purpose is to determine the size of the mortgage or the amount of home equity line of credit. The appraised value is the value of the property based on standards that borrowers usually pay for.

Assessed Value
The local or county government is the one that determines the assessed value of your home. Usually, the city or county assessor or tax collector performs this valuation. This is important in order to assess the house's tax bill. Often, the assessed value is essential for the government to know exactly how much property taxes should be imposed on the home.

Fair Market Value of Home
The licensed appraiser usually performs this type of valuation. This is necessary for determining home insurance claims, property tax assessments, or home mortgage refinancing. Also, this is important for a short sale and eminent domain proceeding. The fair market value depends on the location. It also depends on the facilities of the home.

Replacement Value
The insurance company is usually the one that determines the replacement value of the home. This is necessary when determining premiums for the home insurance policy. The replacement value is practically the amount you need to cover the cost of replacement if the home and everything inside it are destroyed. This valuation is essential. The reason is that the insurer has agreed to provide coverage for your home. Also, the coverage includes all materials and belongings inside it.

Actual Cash Value
The insurance company performs the actual cash valuation. This is important when determining the home insurance policy. The actual cash value is the cost of replacement for your home in its present state. This is different from the original value if it was new. 

Some Final Words
The value of your home fluctuates depending on the situation. You might come across various types of valuations for your home, depending on the circumstances. The most important thing is that you are using the right valuation for the right purpose. Determining home insurance is reliable as long as the insurer uses the correct valuation.

At Insurance Marketplace, Inc., we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (541) 779-0177 or Click Here to request a free quote.