Fire insurance value

According to the law, all buildings must be insured against fire, and the insurance amount is based on the building’s fire insurance value. The estimate should reflect how much it will cost to rebuild a particular house after a total loss, so that it will be comparable to what it was before.

Fire insurance value covers the material value of the building (for example timber, concrete, steel) and the cost of construction, less depreciation due to age, wear and tear and condition. Fire insurance value never fully depreciated, but during the first 60 years, the fire insurance value is depreciated to some extent. It is assumed that the building has received normal maintenance. In addition, the cost of removing fire debris is included. Household effects or other movable assets are not included in the fire insurance value.

Fire insurance value does not affect the property value or property tax on residential housing.

Fire insurance value is recalculated on 1 June each year based on primary component prices (prices of, for example, concrete, steel and timber). In the period between these recalculations the fire insurance value is updated on the first of each month with the Statistics Iceland‘s building cost index, base 1987.

Initial fire insurance value

When a building comes into use or has been registered as complete, the owner is given the opportunity to submit more detailed information on the building with request for initial fire insurance value, so the fire insurance value best reflects its value.
The prerequisite for a property to be put into use according to the building code is that a safety inspection has been carried out by the local building inspector.

Revaluation of fire insurance value

If you believe that the fire insurance value of your building is incorrect, for example due to renovations or extensions since the property was last assessed, you can apply for revaluation of fire insurance value.