Insurance appraisals play an essential part in determining coverage types and costs for a property. Unlike a purchase appraisal, insurance appraisals don’t consider a property’s market or land value like they would for the sale or refinancing of a property. Instead, inspectors conduct an in-depth assessment to determine the property’s replacement value or estimated damages following a covered loss like a fire, accident, or natural disaster.
Property insurance costs and coverage can vary. In the event of a loss, the last thing a property owner needs is insufficient coverage. The appraisal process ensures that they have an insurance policy that’s best suited for the property and possibly its contents. Let’s discuss what inspectors are looking for during an appraisal and what the process entails.
The cost of rebuilding or repairing a property isn’t the same as the market value. When conducting an insurance appraisal, inspectors consider many variables, such as year of construction, living area, materials used, overall condition of the property, recent updating/ upgrades, architectural details, etc. All of these data points factor into the estimated replacement cost to put the structure back to how it was before damage may occur.
What Inspectors Are Looking For
When shopping for a property insurance policy, insurers may send an appraiser to collect a rebuild estimate for the property. At the same time, other companies may rely on software to calculate rebuilding costs using square footage and the build date. The inspector will evaluate and grade the property’s contents during the insurance appraisal process. They will look at costs associated with debris cleanup and removal, labor, construction and materials, and any other factors or activities necessary to restore the property to its state before the incident.
For additional insurance that covers the property’s contents like art or rare and unique items, insurance companies may also conduct a formal appraisal to compile a detailed list of the items. They’ll then estimate their value based on comparable items on the market and take into consideration future market fluctuations. Once the appraisal is complete, the estimated replacement cost is used to calculate the owner’s insurance premium. So whether the owner needs a new policy or has an existing one and wants to ensure that they’re not underinsured or paying more than they need to for coverage, an appraisal can save the owner money in the long run.
Find the Right Coverage
With recent events like rising labor and supply costs and increased natural disasters driving changes in the insurance market, now’s the time to ensure that our clients and their property are protected with the right insurance coverage. Quaker and our team of experts are here to provide you with the resources you need to navigate property, umbrella, and excess coverage options. Contact us today to learn more.