Insurance Appraisals Vs. Purchase Appraisals

If you do not like your appraisal, you can seek a second opinion.
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If you are current home owner or a prospective buyer, appraisals are inevitable. Two appraisals you will encounter are an insurance appraisals and a purchase appraisal. While they have some elements in common, they also have some fundamental differences. Understanding both will help you know what to expect before, during and after the purchase of a home.

Insurance Appraisal

Insurance is essential if you own a home. The cost and type of coverage varies depending on many factors, which an appraisal examines. Its purpose is to establish the value of your home and its contents, then provide an insurance plan and premiums appropriate to their value. This is beneficial, as it prevents you from being over-insured or under-insured. It also provides the insurance company with a record of your possessions, enabling it to expedite claims so that your property can be replaced quickly.


Insurance appraisals are handled by professionals. An agent will come to your home and take detailed information about its structure, size, contents and features. This allows them to determine the cost of replacing some or all of the structure and valuables if they are damaged or destroyed. The agent photographs and documents everything for future reference.

Purchase Appraisal

Like its counterpart, a purchase appraisal is meant to determine the value of the property. However, the purchase appraisal establishes a purchase price for the home rather than its replacement cost. Purchase appraisals are conducted when you plan to buy a home, whereas insurance appraisals determine insurance premiums once you own the house.


Lending companies contract appraisers to determine how much money they can lend for a mortgage. Like an insurance appraisal, the appraiser will evaluate the property. To determine the value, the professional analyzes the land and construction records, and considers the ever-changing real estate market. After collecting this information, the home's price can be established, thus giving you a specific dollar value for your mortage.

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