INSURANCE TO VALUE – ITV – PROPERTY INSURANCE
As your single most valuable asset, it is of great importance to properly insure your home by selecting sufficient coverage to rebuild your home following a total loss. The insurance industry refers to the value as ITV (Insurance To Value).
What is ITV?
ITV is Insurance To Value which refers to the amount of dwelling coverage afforded under your homeowners insurance policy. The Dwelling Coverage may also be referred to as ‘Coverage A’. It is essential that the coverage amount is sufficient to rebuild the home following a covered event involving complete destruction.
What is the difference between Sales/Market Value and Insurance To Value (ITV)?
Homes are bought and sold according to market value which varies as the value reflects desirability of the home, the value of land, location, school districts, taxes and economic conditions. When calculating ITV, it is important to calculate the actual cost to reconstruct the destroyed dwelling; the ITV will be based on the current cost of materials and labor, it will also include the cost of debris clearance, engineering fees, permits and general contractor’s overhead and profit.
Reconstruction costs more than New Construction!
New home developers usually build multiple homes at one time; they bid out the projects to sub contractors in an effort to obtain the lowest pricing. Often the subcontractors respond by very low quotes in order to secure a relationship and obtain more jobs in the future. Not only does this bidding process apply to labor but also to materials; for example, the cost of 1 single kitchen sink may be as much as 40% greater than purchasing 30 kitchen sinks (per unit). For this reason, building a single home costs considerably more than the actual cost of a developer constructing multiple homes.
Selecting the proper amount of coverage will be the responsibility of the homeowner. Luckily, HDA Insurance has software available to assist the process of calculating the reconstruction cost of a home; the software uses reconstruction values figured by the industry standard inclusive of labor, materials and associated costs of completing the project.
For anyone who would like an estimate to reconstruct their home, our staff are available to conduct a brief telephone interview and E-Mail the completed report showing the breakdown and total cost of reconstruction.