Insurable Value Appraisal

Appraisal is an exciting profession. We can help a lot of people through appraisal services. One of our service is insurance appraisal. The importance of valuation for insurance purposes cannot be understated. Inflated insurable property values can cause a business to pay excessive insurance premiums, while having inadequate insurance can be disastrous if a loss occurs.

Insurance appraisals start with a site inspection followed by a property analysis to determine the calculation of supportable estimates for replacement costs. The scope of work is to appraise the improvements “as-is” without the underlying land value and the subsurface structure (foundation), while depreciation should never be deducted.

In insurance appraisal the appraiser provide an estimate of the new cost of a substitute building, often called Replacement Cost New (RCN). In developing an estimate of the Replacement Cost New (RCN) for insurance placement purposes. the Cost Approach is best suited , as insurance premiums are normally based on Replacement Cost and not market value. The market and income approaches to value are therefore not applicable to the insurance appraisal assignment.

There are several additional considerations to complete an effective insurance appraisal.An appraiser should also be conversant with current laws on insurance, building code, zoning and other important laws necessary in rebuilding the property.

An insurance appraisal requires a unique set of skill, and has specific demands that go beyond a house or commercial property performed for a bank or assessment. Keeping up to date in construction methods, costs, building codes, insurance laws are critical to providing a reliable insurable value estimate. For this reason property owners are best served when they hire appraisers who are experience to do this type of work.

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