A common insurance industry practice, Insurance to Value (ITV) is a method used to calculate whether or not a home is adequately insured. Understanding ITV and its effects before a loss can help prevent claim payment frustration or dissatisfaction after a loss.
The ITV can affect the amount TWIA will pay when you have a loss. ITV is expressed as a percentage, and to have an ITV of 80% means that the amount of insurance on the home is 80% of the cost to rebuild the entire structure. When a home is insured through TWIA at 80% or more of its estimated cost to rebuild, it is considered to have Replacement Cost Coverage. Replacement Cost Coverage pays the dollar amount needed to replace the home, unless the home is insured to value below 80%.
Depreciation, the decrease in value of the home due to age and other factors, can significantly decrease the amount paid on a claim. TWIA recommends all homes be insured to value at 100% of the cost to rebuild, so in the event of a total loss the claim payment would most closely match the cost to rebuild (minus the deductible). The Insurance Information Institute is one of many available educational resources with information on ITV.
The table below provides examples of how your ITV can affect the amount TWIA will pay in the event of a total loss and a partial loss:
Reviewing your coverage amounts with your agent annually is always a good idea. If you have questions about ITV, we are also available as a resource to policyholders and can be contacted by phone or email.
The purpose of this page is to provide you with access to information needed to make coverage decisions that are right for you. It is not intended to replace the insurance policy, endorsements, or guidance from a policyholder’s agent.