Why Property Valuations are Under the Microscope

(And What Risk Managers Should Do About It)

If it feels like property insurance valuations are getting more scrutiny lately, you’re not imagining it.

Across the insurance industry, especially in the public sector, accurate Statements of Values (SOVs) have moved from “important” to mission-critical. And for risk managers overseeing municipalities, school districts, and state-owned properties, the consequences of getting it wrong have never been higher.

Let’s take a closer look at what’s driving this shift and what you can do to make your valuations as accurate as possible.

Why Valuations are Suddenly a Big Deal (Again)

Property valuations have always been foundational to insurance, but several forces have converged to raise the stakes. These include:

Inflation and construction cost volatility
Supply chain disruptions and tariffs
Increased insurer scrutiny
More frequent catastrophic events

In fact, replacement costs in some sectors have increased dramatically in recent years, leaving many organizations unknowingly underinsured.

At the same time, underwriters are asking tougher questions and expecting better answers. For organizations that have been relying on value trending for longer than three to five years between appraisals, this puts greater pressure on them for accuracy. It makes getting a current and thorough onsite valuation of property more important than ever.

The Hidden Risk: “Silent” Underinsurance

One of the biggest challenges in public entity risk management is that underinsurance may not be obvious, until it’s too late.

Here’s how it happens:

Property values haven’t been updated in years
Desktop estimates rely on incomplete or inconsistent data
Inconsistencies span across the property portfolio
Specialized properties (like water/wastewater) may use the same valuation process as standard properties. (Learn why this matters here.)
Blanket limits create a false sense of security. (Learn more about the issues with blanket policies.)

Then, when a loss occurs, the gaps become very real and, unfortunately, very expensive.

And underinsurance has become a widespread problem. Hub International’s 2025 study indicated that 73% of companies in North America reported being underinsured against “profit-threatening risks.” It’s one reason recent market reports continue to highlight valuation accuracy as a persistent issue, especially as rising costs outpace outdated data.

Why Accurate Property Valuations Matter More for Public Entities

For risk pools, municipalities, and state agencies, the implications go beyond financial loss. They also have their own unique challenges like:

Budget constraints that limit flexibility
Taxpayer accountability, which increases scrutiny
Large, diverse property portfolios that add complexity

And because many public entities rely on pooled or shared risk structures, inaccurate values can impact more than one organization. Centralized property management software helps you store photos, attributes, and history, so you can tell what changed and when, and separate valid claims from shifting scope.

Common Valuation Pitfalls to Watch Out For

Even well-managed organizations can fall into the following types of traps:

Failure to Account for Unique Features: Historic buildings, custom construction, or specialized facilities often require deeper analysis.
Over-Relying on Desktop Valuations: While fast and cost-effective, desktop valuations can miss critical property details, especially for unique or aging structures. Nothing replaces an on-site valuation by a skilled appraisal professional.
Outdated Statements of Values: If your SOV hasn’t been updated in the last few years, there’s a strong chance it no longer reflects current replacement costs. You are likely also including property that no longer exists or missing property that has recently been added. And this can really affect your Total Insurable Value (TIV)!
Inconsistent Data Across Properties: Different data sources, formats, and assumptions can lead to uneven valuations and, therefore, big underwriting challenges.

What Insurers Are Looking for Now

Underwriters today want more than just numbers. They want confidence. That means when they receive your SOV, they want to see:

The clear methodology behind your valuations
Consistent, defensible data
Documentation and transparency
Evidence of regular updates

In short, they’re looking for thorough quality data.

Best Practices for Getting It Right

The good news is there are ways you can take charge of your property data and strengthen your valuation strategy:

Establish a Regular Update Cycle: Annual data reviews are becoming the norm and not the exception. While on-site appraisals should be addressed every three to five years, property data isn’t static, so it’s still important to audit your Statement of Values regularly for red flags. (Learn how to do this here.)
Use Multiple Credible Data Sources to Fill in the Blanks: Leverage multiple data sources like inspection data, historical records, wind and flood data, original architectural documents, Google Earth imaging, and other sources to improve your data accuracy.
Prioritize High-Value or High-Risk Properties: Focus your resources where inaccuracies would have the greatest impact. Choosing high-risk or high-value properties to evaluate more thoroughly makes the most of your time and effort.
Document Your Process: A clear, repeatable methodology builds credibility with carriers.
Use a risk management software tool for improved data management. Use centralized, configurable risk management software to store and manage your property data. This eliminates the version control issues associated with spreadsheets because all users see the most current data, as well as change history. Software reporting can also make it easier to find data inconsistencies across a wide property schedule. (Learn more about how RiskStar risk management software can help you with this.

Final Thought: Accuracy is a Strategic Advantage

In today’s market, accurate property valuations put greater control in your hands. Control over your data, control over your coverage and, ultimately, control over your risk.

For public sector risk managers, it transforms responsibility into empowerment, giving you the peace of mind that you are serving your communities with earned trust and confidence.

Note about this article:

This article was drafted by AI, and human-edited by our team.