Insurance vs. Market Value: Why They Differ

Two numbers, two purposes

An insurance, or replacement, value reflects what it would cost to buy a comparable piece at retail, today, in a hurry. It is deliberately high, because it protects you against the worst case of having to replace something quickly.

An auction estimate reflects what a willing buyer is likely to pay in an open sale. It is a market value, not a retail one, and it will almost always sit below the insurance figure — sometimes considerably.

Both are correct; they simply serve different needs. Ask a valuer which number you are being given, and why, before you rely on it.

Owners are often surprised to learn that the same object can carry two very different values. An insurance figure and an auction estimate answer different questions, and confusing them is a costly habit.

Two numbers, two purposes

An insurance, or replacement, value reflects what it would cost to buy a comparable piece at retail, today, in a hurry. It is deliberately high, because it protects you against the worst case of having to replace something quickly.

An auction estimate reflects what a willing buyer is likely to pay in an open sale. It is a market value, not a retail one, and it will almost always sit below the insurance figure — sometimes considerably.

Both are correct; they simply serve different needs. Ask a valuer which number you are being given, and why, before you rely on it.