05/12/2021
If you’re a homeowner or own a business, you’ve likely received the annual statement of your newly assigned taxable property values from your local appraisal district, or you will soon.
Unfortunately for the majority of us, current market conditions in the real estate and construction industries are likely to result in a significant jump in your taxable values, and the taxes that follow will see a corresponding increase based on those values even if the tax rates remain unchanged.
We’ve talked to several business and home owners that have seen significant increases, typically above 10-15% or higher this year alone, and that appears to be a common occurrence. Some are concerned about not only their tax burden, but also if their home or business insurance policy building values will or should be increased, and if they will experience an increase in insurance premiums as a result.
These are legitimate concerns, but there are a few things to keep in mind related to your home or other building values, how they are determined, what they are used for, and how they affect you.
1.). Appraised Tax Value: Your appraised property value sent by your local appraisal district is a determination of your taxable value. While that number is generally intended to be an estimate of the market value of your property, it will typically not be a truly accurate representation of what your property would sell for in many cases for a variety of reasons. This number will include your appraised land value and value of the improvements. As taxpayers we prefer these values to be as low as possible. If you see an increase and don’t believe it is justified, you can participate in a process to contest or dispute those values.
2. Market Value: This is what you can realistically expect you may be able to sell your property for to a buyer in today’s market. This is typically determined by a review of the current market and relevant property details and condition by a qualified realtor or an appraiser during a real estate transaction. Since no two properties are exactly the same, and markets change constantly based on supply, demand, loan interest rates, and other factors, an individualized assessment of your property and today’s market will yield the most accurate value. If you are selling property, you want to maximize these values.
3. Estimated Replacement Cost: This is the value that matters to your insurance company. The tax appraisal and market values are less relevant when determining this value, though it is helpful to have knowledge about how those values may correlate in to construction cost in some ways. This value does not include the value of land, just the improvements. If you’ve just completed the construction of your building or home, you probably have a pretty good idea about what it will cost to replace or rebuild if necessary, but as we’ve seen with the skyrocketing cost of construction materials, increased demand on contractors for many reasons, and other factors, this value can change pretty quickly. For that reason, it is important that your insurance agent or company understands the details of your home and range of costs associated the cost of construction similar structures in your area. These details will all be relevant as they build an estimate of replacement cost on your behalf. We also highly recommend that your policy not only insure your structure or home to 100% of its value, but also that you re-evaluate that value annually, consider adding an endorsement to provide coverage above that amount when it is available. This is especially important after a catastrophe that impacts many structures in your area, or there is an unexpected sharp increase in the cost of labor or materials, as we have seen recently.
While we can’t help you to save money on your taxes, wehelp you to save enough money on your insurance bill to offset those increases, or even more. We hate to see good people spend more than they should on insurance, or worse, be underinsured when disaster strikes- fortunately we can help you save money while increasing your coverage in the process.
In the last two weeks, we have saved several new and current clients at least $500 -$1,000 off of their annual insurance premiums, or even more, while making sure their policies are customized to their needs. In most cases these were clients who had a pretty good value on their insurance previously, or even the best value available on the market 1-2 years ago, but were with companies that are not as competitive now.
With access to even more insurance companies than most large independent agencies, We can shop dozens of companies on your behalf to make sure you are getting the best combination of value, coverage, and service available for your home, auto, business, or life insurance policies. Reach out to us at 830-992-3460 Ext 100, or send an email to [email protected] to evaluate your options!
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