Why Does My Homeowner Policy Have Such a High Dwelling Limit? My House Isn't Worth That Much!
The "value" of your home is different for real estate, taxes, and insurance. Let's look at the differences between a real estate appraisal , the purchase price , the property tax appraised value , and the reconstruction cost estimate . Let's start with the property tax appraised value. With older homes, the amount taxed can be very different than the real estate appraisal. A real estate appraisal takes into consideration the age and condition of the home, plus upgrades and additions. The purchase price is usually based on a combination of the real estate appraisal and the market value . Market value is the amount similar homes are selling for (within a certain distance of the home's location). The reconstruction cost estimate is the amount insurance companies use to calculate the cost of rebuilding your home if it is severely damaged or is a total loss after a covered event such as tornado or fire. Although each carrier uses their own version of the RC...