Insurable Value vs. Market Value

Homeowners often reluctantly pay the premiums that accompany excellent insurance policies. Yet, we at Mike Leonard Insurance Agency encourage them to insure their homes for the maximum insurable value. When a catastrophe does strike and they run into our office singing, “My house is on fi-i-ire” to the tune of Alicia Key’s song, they are always happy the insurance policy covers all the damage. If we could, in good conscience, advise homeowners to take out smaller insurance policies, we would. As insurance agents, though, we are all too familiar with the phrase, “It’s not a problem until there is a problem.” When there is a problem, a homeowner’s insurance policy should provide full coverage.

When looking at homeowners insurance, fully insuring a home means covering its entire insurable value. The insurable value is different from the market value of a property; it can be higher or lower, depending on the circumstances. The market value is simply how much a building will sell for on the real estate market. This price includes the value of the land, if it is part of the property. The insurable value, on the other hand, does not include the land. It does, however, include the cost of actually rebuilding the structure, which can be lower or higher than the resale value.