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 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?