With the new 2019 BC Assessments available now, many people are thinking about the values of their property as well as the property taxes they will owe. However, another important factor to consider, is home insurance. Many people don’t associate home assessments with home insurance, but the two are definitely related! Read on to learn more.
Different Ways To Assess The Value Of Homes
The assessments that you receive from BC Assessment is actually just one of many ways of valuing a home. Below are a few different ways a home can be valued, as well as the situations they usually happen in.
Assessed valuation is usually performed by a local government, and is usually used to calculate one’s property tax bill. This is the BC Assessment you recently received.
Appraised valuation is usually performed by an independent appraiser, and is usually used when buying a home, or getting a mortgage / HELOC (home equity line of credit).
Fair Market Value
Fair Market valuation is usually performed by licensed appraisers, and is usually used for home insurance claims, home mortgage refinancing, or property tax assessments.
Replacement valuation is usually performed by insurance companies when calculating the details of a home insurance policy.
Actual Cash Value
Actual Cash valuation is usually performed by insurance companies when calculating the details of a home insurance claim in order to find out the updated replacement value after depreciation.
What This Means For Your Home Insurance
Although the valuation methods listed above are all different approaches, the value of your home directly affects your home insurance policy & potential claims. This means that the details of your home insurance policy should be periodically reviewed and updated. For example, if your home assessment has increased by 15% this year, but your home insurance policy hasn’t been updated, this may mean that the ‘Replacement Value’ is lower than the assessed value – putting you in an ‘under insured’ position. Updating your home insurance periodically will minimize this risk.
Although it’s standard for insurance companies to increase the re-build value of homes every year automatically just to keep in line with inflation, these automatic adjustments for inflation may not exactly match the appreciation of your property. This is especially the case if you have done any significant upgrades. It’s important to work closely with your insurance broker to ensure everyone is on the same page when it comes to the value of your home.
Final Words on Your Homes Assessments & Your Home Insurance
If the BC Assessment value of your home has increased year-over-year, it is safe to assume that the other forms of valuing your home will also show increases. These assessments can provide some insight into the value of your home if you were to sell it. However, it is important to periodically update your home insurance policy to ensure that the ‘Replacement Value’ stays aligned with your assessed value. For more information on assessing the value of your home and your home insurance details, feel free to get in contact with an HIP representative who may be able to answer any questions you may have.