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Herbert
M. Sheaner, Jr.
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| Auto Quote | Home/Tenant Dwelling Quote | Flood Insurance |
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Property Valuation One of the most confusing aspects of purchasing property insurance is determining what amount to insure. Valuation for insurance purposes is substantially different from other known values such as Market Value or Appraised Value. Insurance is typically written as either Actual Cash Value or Replacement Cost Coverage. Replacement Cost Coverage, as provide on the ISO-Commercial Property Policy, will replace property damaged by a covered loss with like kind and quality materials. Replacement Cost is limited to the cost of replacing the same structure on the same premises (although it can be rebuilt anywhere) as soon as reasonably possible. Replacement Value can best be determined by a contractor’s bid that includes
Actual Cash Value , on the other hand, is Replacement Cost less depreciation at the time of loss. Depreciation is largely the effects of Age & Condition, Wear & Tear, Obsolescence and Functional Value on the structure. Claims Adjusters generally agree that the maximum depreciation due to age & condition is 50% – 60%.Local Building Codes, Zoning and Land Use and the Americans with Disabilities Act can also affect the amount of insurance you should carry. Most Fire Marshals, for example, will condemn an entire building if as much as 50% of the structure is destroyed. In the case of a fully insured building with a replacement value of $100,000 that suffers $75,000 in damage. The insurance recovery would be $75,000, however, the additional loss of the undamaged portion of the building ($25,000) + Demolition Cost ($3,000) + Additional Construction Cost ($5,000) to conform to current code would go uninsured. These additional exposures can be covered by endorsement. Contact us for a complete review of your policies. |
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