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Insurance Agents Clarify Aspects of Property Revaluation

Aug. 23, 2007 — The recent real estate revaluation by the Tax Assessor's office won't impact property insurance rates because assessment for property insurance purposes is different than that for property tax reasons, local insurance agents said.
"Insurance values are based on replacement cost of the building. That doesn't include the value of the land," Esther Ledee at Topa Insurance said.
The revaluation figures are based on the market value of an entire property, including the building and the land it sits on.
John Harper at Marshall and Sterling on St. Croix said market value and replacement costs are not the same thing. Market value is what a house sells for while replacement is what it will cost to rebuild.
He said it appears a number of people are confused by this issue.
"We've had several people walk into our office about this issue," he said.
Jim Tunick at Theodore Tunick and Co. said that people don't go to the tax rolls to find out how much insurance to buy.
"Most people carry more insurance that the old tax appraisals show. They aren't going to the tax rolls to see how much coverage they need," he said.
Additionally, local insurance agents pointed out that property insurance is just on the building, not the land. Both buildings and land are included in the revaluation numbers recently received by property owners.
Tunick and Ledee both said that replacement values for insurance purposes are placed on buildings by appraisers, not the Tax Assessor's office. Harper said that contractor was the best person to come up with the replacement figure.
Ledee said that the insurance appraisal takes into account things like square footage and location.
"And it depends on zoning," Ledee said.
The ins and outs of how much policy holders can collect when they have a claim as well as the type of insurance they carry depend on their policy.
The three insurance agents pointed out that people with a mortgage must have property insurance in order to get financing.
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