Why this review matters
Property limits work only when the underlying values and assumptions are defensible. Replacement cost is different from market value, assessed value, and loan balance, and it should account for the cost and time required to reconstruct the insured property.
Information to prepare
- Building replacement-cost estimates
- Contents, inventory, tenant improvements, and equipment values
- Peak inventory or seasonal value fluctuations
- Revenue, continuing expenses, and recovery timelines
- Utility dependencies, key suppliers, and temporary-location options
Decisions to discuss
- Replacement cost versus actual cash value
- Coinsurance, agreed value, and deductible structure
- Business income and extra expense limits
- Equipment breakdown, ordinance or law, and flood protection
Common pitfalls
- Basing limits on real estate market value
- Omitting tenant improvements or mobile property
- Assuming a twelve-month recovery is always sufficient
- Failing to revisit values after construction-cost changes
Frequently asked questions
Why can market value differ from replacement cost?
Market value includes factors such as land and local demand, while replacement cost focuses on reconstructing the building with labor, materials, professional fees, and related expenses.
What is a statement of values?
It is a schedule of insured locations and relevant building, contents, equipment, and income values used to structure and evaluate the property program.
Coverage descriptions are general. Availability, eligibility, limits, exclusions, and policy terms vary. Review actual policy documents and requirements with an appropriate insurance professional.