The difference between municipal value on buildings and your building insurance

“Why is there a difference between my house’s valuation by my Insurer and my municipal value and which one of the 2 values are correct?”

“My house is not worth as much as you are wanting to insure it for.”

“I will never be able to sell my house for the price that you are suggesting.”

These are questions and comments received by brokers regularly. In this article, we will explore the difference between the 2 values as well as why your insured amount is usually higher than your municipal value.

Municipal value refers to the amount that a reasonable buyer will purchase the property for from a reasonable seller. It is purely market related. Even though the housing market is starting to pick up again, it is still not where it should be in order to accurately determine the real value of your property should you want to rebuild an exact replica of your home on the exact piece of land. Your municipal value is also calculated with your land and geographic location included in the equation.

The valuation on your property by an insurance company or an assessor is based on the actual cost of building an exact replica of your home. The land or ground itself is not brought into the equation. It is determined by the style in which you built your house, the finishes, paving, perimeter walls, gates, swimming pools etc. This price is for the building structure itself and does not include your exterior perimeter walls, fixtures or fittings outside of the building structure itself.

From the differences mentioned above, it is clear why your municipal value cannot be used as the insured amount for your home.  Using your municipal value for your insured amount could potentially open the door for underinsurance as well as the application of “average”.

It is best to seek an experienced broker’s advice when determining insured values, not only for your buildings, but also your entire portfolio. APBCO Brokers doesn’t want you to pay any more than what you absolutely need to. We are here to assist you and ensure that, should a claim occur, you are insured correctly.


Contact us for a quote or for advice here.


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