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0 pointsthrowaway2011035y ago0 comments

Insurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.

0 comments

mullingitover5y ago

Exactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.

paul_f5y ago

Actually, no, they don't. Insurers make no valuation on the land, only on the improvements. There is no appraisal done when buying a homeowners or business insurance policy

yellowapple5y ago

> Insurers make no valuation on the land, only on the improvements

Well

    $PROPERTY_VALUE = $LAND_VALUE + $IMPROVEMENTS_VALUE

Which means

    $LAND_VALUE = $PROPERTY_VALUE - $IMPROVEMENTS_VALUE

$PROPERTY_VALUE is set by the market automatically, and we've already established that insurers are able to calculate $IMPROVEMENTS_VALUE, so - tada! - you've now got your $LAND_VALUE.

mullingitover5y ago

This still gives you something to work from, since the mortgage (or appraised value) - improvements = land value.

j / k navigate · click thread line to collapse

0 comments

mullingitover5y ago

Exactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.

paul_f5y ago

Actually, no, they don't. Insurers make no valuation on the land, only on the improvements. There is no appraisal done when buying a homeowners or business insurance policy

yellowapple5y ago

> Insurers make no valuation on the land, only on the improvements

Well

    $PROPERTY_VALUE = $LAND_VALUE + $IMPROVEMENTS_VALUE

Which means

    $LAND_VALUE = $PROPERTY_VALUE - $IMPROVEMENTS_VALUE

$PROPERTY_VALUE is set by the market automatically, and we've already established that insurers are able to calculate $IMPROVEMENTS_VALUE, so - tada! - you've now got your $LAND_VALUE.

mullingitover5y ago

This still gives you something to work from, since the mortgage (or appraised value) - improvements = land value.

j / k navigate · click thread line to collapse