With the new 2019 BC Assessments available now, many people are thinking about the values of their property and the property taxes they will owe. However, another essential factor to consider is home insurance. Many people don’t associate home assessments with home insurance, but the two are related! Read on to learn more.
Different Ways To Assess The Value Of Homes
The assessments you receive from BC Assessment are just one of many ways of valuing a home. Below are a few different ways a home can be valued and the situations they usually happen in.
Assessed Value
A local government usually performs assessed valuation and is typically used to calculate one’s property tax bill. This is the BC Assessment you recently received.
Appraised Value
An independent appraiser usually performs appraised valuation and is generally 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 generally used for home insurance claims, home mortgage refinancing, or property tax assessments.
Replacement Value
Insurance companies usually perform replacement valuations 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 to determine 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 ‘underinsured’ position. Updating your home insurance periodically will minimize this risk.
Although it’s standard for insurance companies to automatically increase the re-build value of homes every year just to keep in line with inflation, these automatic adjustments for inflation may not precisely match the appreciation of your property. This is especially the case if you have done any significant upgrades. It’s essential to work closely with your insurance broker to ensure everyone is on the same page regarding the value of your home.
SEE: What To Know About BC’s Condo Insurance Market Trouble
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 could 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 contact a representative who can answer any questions you may have.
Contact Us!
If you live in Alberta or British Columbia and are looking for Home Insurance, we are here to answer any questions you may have about our range of home insurance products and services. Contact our team at 1.844.544.4663 and see what makes us Harbord – The Home Insurance People™!
LEARN MORE: Explained: What Are Condo Insurance Loss Assessments?
