The "Legal-Ease" Glossary
This is the value of commercial property as determined by city hall or a municipal assessor.
A piece of property's assessed value is determined by the city assessor's office to find out your total property tax obligation. Values are determined by going around the whole town viewing properties and interviewing owners. The tax rate depends on the combined assessed value of all the town’s properties. Because assessments are time-consuming and expensive, they aren’t recalculated very often, even though your tax rate may change from year to year.
Though assessed value is important for taxes, this figure doesn't directly affect your insurance. In fact, a commercial property’s assessed value might be very different than its appraisal or replacement value, two figures that do impact your insurance.
The appraised value depends on the time and the market activity, whereas the assessed value of a property doesn’t concern itself with those factors. Think of it this way: appraised value cares about one property (your office), whereas the assessed value cares about the bigger picture (the whole town). For this reason, the assessed value is often lower than a property’s appraisal.
Generally speaking, your property's replacement value is the most important number when it comes to Property Insurance. This is what it would cost to replace or repair damaged property with new property of comparable quality. It differs from an appraisal because it may or may not correspond with the market value of the property. Often, the replacement value of a property is higher than the appraised value because it takes into consideration the cost of repairing damages (materials, time, and labor) – not just how much you could sell the property for if you put it on the market.
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