What is difference between insurance value and market value for house in Australia, insurance value is rebuild cost $500K to $1M what it costs to rebuild house if destroyed, market value is what house sells for $600K to $1.2M including land $300K to $600K, with insurance value usually lower than market value. For example, house market value $800K includes land $400K plus building $400K, but insurance value rebuild cost $500K as rebuild includes demolition $20K, architect $10K and materials $470K, so insurance value $500K less than market value $800K. Market value includes land value $300K to $600K, location premium $100K, and demand, while insurance value includes only building structure walls, roof, floors and permanent fixtures, not land, as land not destroyed by fire. Insurance value based on construction costs $2,000 to $3,000 per sqm, so 200 sqm house $400K to $600K insurance value, while market value based on comparable sales $600K to $1.2M. For car, insurance value agreed value $20K what insurer pays if total loss, market value $18K what car sells for privately, with agreed value often higher. So difference is insurance value rebuild or agreed value cost to replace building or car $500K, market value sale price including land $800K, with insurance value lower than market value for houses due to land, and similar for cars but agreed may be higher than market.
1 votes
Marked as accepted