Why is the value of my home insurance more than the tax or market value?
A common source of confusion is when homeowners realize the replacement cost value for their homeowners insurance is higher than what they would get if they sold their house... in order to replace a house in case of a complete loss an insurance company and agent has to use a cost estimator which considers the cost to rebuild and not what the house would sell for... so if labor costs are high and materials are high it has no bearing on what the market is willing to pay for the property. For example, it is not unusual for a home that was bought for 450,000 to be insured for 650,000. The best way to look at it is if a home has a mortgage of 100,000 but is valued by the market at 50,000, it does not matter to the bank what the market says its worth... an insurance company has to comply with state regulation and value the house at what it would cost to rebuild not sell.
Will my insurance go up if I make a claim?
Yes and No. It depends! Rates go up or down relative to many issues... multiple claims, size of claims, market conditions, insurance company losses or gains, area you are in, etc. Being able to predict what rates will do relative to a claim or claims is almost impossible. One small claim may not impact rates, multiple claims will. Small is relative to the insurance company.