I cant tell you how many times our staff encounter the question of home values when they complete a home evaluation for insurance. Quite often there is some confusion surrounding what this number represents, and where it comes from. So, in the following paragraphs, I will briefly outline what this number contains and what it includes
Cost to rebuild
First and foremost, the thing you need to know about a home evaluator is that it is trying to determine what it would cost to rebuild your place as it stands today. There are factors including location, readiness of materials, and labor costs. If you have a home in Saskatoon, the evaluator will account for the cost of material. However, if your home is located in Uranium City and all the materials need to be shipped in, the evaluator will reflect that cost as well.
This is a common factor to overlook. Should your home be damaged by a fire, and part of it still stands, there will be costs involved in cleaning up the remains of the house that was damaged. These costs can be quite high and they get added to the home evaluation total to reflect these disposal costs
Not a home appraisal
An evaluator isn’t an appraisal of your home to determine market values. The evaluator isnt meant to provide answers as to what the resale value of your home is, nor can it help you in sale negotiations.
Doing your own homework
If you are still questioning your home value after its presented to you on an evaluation form, the best self-check to do for the value is to use a rough number of $275 per square foot of finished living space. This wont be an exact number, but it will get you in the ball park of where most common evaluations will be.
Cost of insurance in relation to home values
The rating tools for home insurance are quite complex now, and there are many folters and algorithms that get used with the rating services now. However, if you find a discrepancy between your rough calculation and what the evaluator is showing, you can put your mind to ease by knowing what cost can be expected for your policy. Again as a ball park, you can factor between $40 – $45 per $10,000 of insurance for your home policy as a base rate. This number doesn’t take discounts into account, but it is a starting point for you to roughly calculate base costs to you the homeowner. So in practical terms, if you have a $300,000 house, you can expect a base cost of $1,350 per year for your insurance, plus/minus discounts, and ALSO plus/minus additional coverages you may purchase (water protection, sewer backup, jewellery, etc etc)
Our goal is to provide you with some basic understanding as a consumer on how home insurance is rated, what factors are included with home evaluations, and how the value of your home impacts the cost of your policy. Again, there are a lot of factors included in rating a home policy, and the numbers used in this blog are crude and not meant to be taken as exact rates.
Should you have more questions, or want to get a home quote, please contact one of our offices today!