Definition
Insurable value is what it costs to rebuild the structure and improvements. It excludes land value (which can't be insured). Get accurate replacement cost estimates to ensure adequate homeowners insurance coverage.
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Insurable value represents the cost to rebuild or repair a property's improvements, excluding land value which cannot be damaged. Insurance companies determine insurable value separately from market value to ensure adequate coverage. Underinsurance can result in significant financial losses in case of damage or total loss, while overinsurance is wasteful and unnecessary.
Pro Tip
Work with your insurance agent to establish accurate replacement value. Underinsurance in case of total loss creates catastrophic financial problems.
Example
A property with a total market value of $500,000 may have an insurable value of $400,000 (structure and improvements), with $100,000 representing land value that doesn't need insurance coverage.