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Exactly! 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 d
by mullingitover 6y ago
Exactly! 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.