What is an insurance appraisal?

An insurance appraisal is a current reproduction cost estimate of the insurable physical assets of a property. These assets typically include buildings, structures and site improvements (pools, tennis courts, etc.) as well as contents and equipment.

There are 2 types of insurance appraisal types, those used for Hazard/Wind policies, and those used for FEMA Flood policies, each with varying differences in the items valued and reported.

Is an insurance appraisal the same as a real estate appraisal?

No, it is a completely different type of appraisal and report.  A typical real estate appraisal determines market value based on data obtained from the market.  An insurance appraisal estimates the current reproduction or replacement costs of the insurable asset.  Or in other words, an insurance value appraisal determines what it would cost to replace or rebuild the insurable asset.  Land values and market conditions are not part of an insurance appraisal.   Real estate appraisals are used for buying and selling while an insurance value appraisal is for determining insurance coverage amounts.

How do you determine the insurable value?
The basic process is the same for all insurance appraisals but there are a couple of different methods used by appraisers. For determining the insurable value of buildings, structures and site improvements we use what is called the Segregated Cost Method.

The Segregated Cost Method enables the appraiser to give separate consideration to all of the major construction assemblies or systems (groups of components) of a building or structure. This method requires a greater degree of understanding of both building construction techniques and the overall cost relationships between occupancies, classes and quality levels, as well as the basic differences resulting from quantity, material grade or workmanship affecting each component.

What is involved in an insurance value appraisal?

  • All insurance value appraisals begin with an inspection of the property. When we first arrive on-site to start the inspection, we typically will meet with a property manager or an authorized representative for the property to review specific details and discuss any related concerns.
  • After the meeting we will begin the inspection, where we will first identify all of the buildings, structures and improvements to be included, and then determine the major construction assemblies or systems for each.
  • We will then photograph, measure and quantify the assets as needed.
  • After the inspection we will begin preparing the appraisal report in the following manner:
    • Review and perform takeoffs from available construction plans.
    • Calculate square footages.
    • Determine major construction assemblies and system quantities.
    • Identify and exclude non-insurable components
    • Calculate insurable costs
    • Create asset description profiles.
    • Assemble a summary schedule of insurable values
Final check and review