Clients with coastal property should consider securing a rebuild appraisal for insurance purposes.
- Buildings should be insured for how much it costs to rebuild them, not what they are worth in the resale market.
- The cost of inflation varies from region to region. Taking a standard inflation increase from year to year could escalate the rebuild value of your property and inflate your insurance costs.
- Some carriers do not provide an inflation guard. If you do not consider increasing and reviewing the value of the property, you could be left short at claim time.
- Carriers can rely on the customer to provide the insurance value. If you estimate incorrectly, a penalty or coinsurance clause could be applied to the claim. This could mean more money out of pocket during the claim process.
Here are some tips of what to look for when hiring an appraisal firm:
- The appraiser should do a physical inspection of the property and not completely rely on information provided by the client, building plans or internet sources.
- The appraiser should be licensed and insured.
- Review sample appraisals from the company to make sure the report you are getting is the quality you are expecting.
- Research the cost to update the appraisal on a regular basis (suggested 3 to 5 years).
Information the property owner may need to have available:
- Access to the property and building.
- “As built” construction plans and community governing documents are helpful.
- The time to review and finalize the appraisal, so the information submitted to the insurance carrier is accurate.
Our agency is happy to provide a list of appraisal firms upon request.