Property Valuation
What is 'insurable value' and how does it differ from market value?
AA. They are identical concepts used interchangeably in Hawaii
BB. Insurable value is the cost to rebuild the improvements (typically for insurance purposes); market value includes land value and reflects buyer/seller negotiations✓ Correct
CC. Insurable value is always higher than market value
DD. Insurable value is set by government regulations; market value by the market
Explanation
Insurable value (replacement cost of improvements) is used by insurance companies to determine how much coverage to provide. It excludes land value (land can't burn or flood away) and focuses on the cost to rebuild structures. Market value reflects land plus improvements as valued by the marketplace and may differ significantly from insurable value.
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