Why did my insurance company appraise my home at a value lower than market value?

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption

UPDATED: Jul 16, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Written By: Jeffrey JohnsonUPDATED: Jul 16, 2021Fact Checked

The main reason that an insurance company appraisal differs from a market value appraisal is because they look at two different things. The appraisal by the insurance company is focusing on assessing the replacement value of your home–and only your home or garage. This figure doesn’t refer to the fair market value for your home or how much you could sell it for, it refers to how much the insurance company will pay in the event that your home is destroyed. The insurance company usually agrees to pay a figure comparable to the appraisal, plus an additional 15 to 25 percent to cover incidentals.

When you have your home appraised and buy home insurance, you are buying insurance in case your house or possessions are destroyed. The value of the lot and land itself is thus not relevant because you are not going to need to replace your land in the event you make an insurance claim. Even if your home is destroyed, by fire for example, the land will still be there for you to build on.

If you have your home appraised for another purpose, such as to determine market value, then the appraisal is based on both the worth of the home and the land. A market value appraisal looks at the market value of your entire property, taking into account the amount of land, the number of buildings, and the size of your home to determine the amount your property would sell for if you put it on the real estate market.

The two different perspectives on the worth of your property can alter the end figure of the appraisal significantly, and may leave you second guessing your insurance company appraisal.

If you are unhappy with the appraisal or suspect your insurance company is underestimating the worth of your home, you may want to have an independent appraiser give you a second opinion. It also might be beneficial to consult an attorney familiar with the appraisal process.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Full Bio →

Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption