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> But the hard part is assessing "value" Insurers have no problems assessing land value and have been doing it for centuries.
by mullingitover 6y ago
> But the hard part is assessing "value"
Insurers have no problems assessing land value and have been doing it for centuries.
- throwaway201103 6y agoInsurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.
- mullingitover 6y agoExactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.
- paul_f 6y agoActually, no, they don't. Insurers make no valuation on the land, only on the improvements. There is no appraisal done when buying a homeowners or business insurance policy
- mullingitover 6y agoThis still gives you something to work from, since the mortgage (or appraised value) - improvements = land value.
- yellowapple 6y ago> Insurers make no valuation on the land, only on the improvements Well $PROPERTY_VALUE = $LAND_VALUE + $IMPROVEMENTS_VALUE Which means $LAND_VALUE = $PROPERTY_VALUE - $IMPROVEMENTS_VALUE $PROPERTY_VALUE is set by the market automatically, and we've already established that insurers are able to calculate $IMPROVEMENTS_VALUE, so - tada! - you've now got your $LAND_VALUE.
- dbcurtis 6y agoNot so much. Insurers don't insure land. The insure property built on land, crops grown on land, and they insure against various kinds of liability. None of my dirt is insured.