Insurable Value is a straightforward concept that reflects the replacement cost of buildings and structures on the property.  This value measures the potential for buildings and structures to be destroyed by fire, storm, or vandalism, and is covered by insurance.  It’s essential to note that when used with replacement cost coverage, this value is based on the cost of rebuilding ‘like’ construction, not on the depreciated condition of the structure.

Insurable value does not include the value of the land.

The insurance company uses insurability to assess the pricing risk of property insurance, providing assurance against potential disasters.

Insurable value and insurance costs can increase dramatically due to inflationary pressures and natural and artificial disasters.  Inflation can drive up replacement costs for buildings and structures, thereby increasing the insurable value.  Similarly, disasters can cause significant damage, necessitating higher insurance coverage and increased insurance costs.   Being aware of these factors can help you prepare for potential increases in insurance costs.

Assessed value is the dollar value assigned to a property to measure and evaluate applicable property taxes.  The assessed valuation determines the value of a property for tax purposes and considers comparable property sales and inspections.  In California, the Impact of Proposition 13 on assessed value is significant.  This proposition may result in a slower change in assessed value compared to market value.  However, staying informed is crucial, as the California Government is continually discussing the potential repeal of Prop 13, which could lead to a significant increase in property taxes.