Desktop Appraisals vs Full Appraisals for Property Insurance Valuation

As risk management and the insurance industry have grown and shifted, property insurance appraisals have changed along with them. The methods available for assessing property values have evolved with advancing technology, new rising needs, and global challenges like the COVID pandemic. Traditionally, the full appraisal (also called an “onsite appraisal”) has been the gold standard for getting the property insurance data organizations need. But with the emergence of desktop appraisals and now virtual valuations, property owners and appraisers have a wider range of options to consider. Each method has its own set of advantages and disadvantages, so it’s important to understand the processes involved and the differences between the options to make the best choice (or choices!) for your organization. This article will discuss the pros and cons of each.

The Full Appraisal

What is a full appraisal? A full appraisal is an onsite physical valuation of each property on your property schedule. It’s assessed in-person by independent valuation specialists who go around the property collecting data on both the exterior and interior of your buildings, assess property-in-the-open, and potentially document any vehicles or other assets.

Pros:

1. It’s comprehensive! Onsite appraisals are designed to offer a thorough, accurate examination of all property in your valuation agreement, enabling appraisers to assess its condition, unique features, and overall quality. This offers unique peace of mind that the data you’re getting is complete, so your insurance statement of values will contain all current property information.
2. Highly accurate: By physically inspecting the property, appraisers can gather the most reliable data, reducing the risk of errors and omissions during the valuation process. Better data accuracy translates to more thorough insurance coverage. It also helps insurers gain confidence in your organization, so a quality onsite inspection can improve your ratings and even your rates.
3. Direct interaction: Onsite appraisals facilitate direct communication between appraisers and property owners, offering personalized insights and addressing any concerns effectively. It allows the appraiser to tap into the historical knowledge of customer contacts who recall important details that may not have been documented before.

Cons:

1. More time-intensive: Conducting thorough onsite appraisals takes time, particularly for larger or more complex properties, requiring careful examination and documentation. It also involves greater coordination between key contacts within your organization and your valuation company. Depending on your insurance renewal deadlines, and your appraisal company’s availability, it can be difficult to schedule and complete quickly. Early planning becomes key.
2. Higher cost: Due to the additional time, travel, and scheduled resources involved, onsite appraisals typically come with a higher price tag, when compared to desktop appraisal alternatives. Appraisals are often priced per building, so the budgeting may not allow for as many on-site buildings to be appraised as are in the portfolio.
3. Potential Disruption: Property owners may find onsite inspections disruptive — especially if they need to be present during the assessment — potentially impacting their daily routines.

Desktop Appraisal

What is a desktop appraisal? A desktop appraisal is when a property valuation expert performs a remote independent value assessment for a property, by leveraging available information sources online and through customer-provided documentation. Missing data is collected via a computer console and may involve looking up original building architects and building plans, historic documents, or leveraging satellite technology. No travel occurs. (You can learn more about desktop appraisals here.)

Pros

1. They can be cost-effective: Desktop appraisals are generally more affordable than onsite appraisals since they do not require physical visits to the property. This reduces travel expenses and associated costs.
2. Efficient completion: These appraisals can be completed more quickly than full appraisals because they primarily involve research conducted remotely, making them suitable for situations requiring quick valuation turnaround times.
3. Convenient coordination: Desktop appraisals offer convenience to property owners because they eliminate the need for coordinating onsite visits and don’t involve using staff as guides, saving time and resources.

Cons

1. Limited Detail: Because they rely solely on readily-available data sources, desktop appraisals may lack the depth of detail provided by onsite inspections. This can potentially lead to inaccuracies in the valuation. With fewer details available, gaps may remain in your property data, and that can prevent you from securing thorough insurance coverage. Without thorough coverage, you could end up underinsured in the case of a loss event. Having limited property data may also prompt insurers to doubt your information, making it harder to secure insurance with a good rating and at a reasonable rate.
2. Risk of Inaccuracy: Without a physical inspection, unfortunately, certain property details may be overlooked that can impact an appraisal’s accuracy — especially regarding unique features or hidden issues. Examining a building via satellite technology gives only one view of the property. While measuring a building using tools like Google Earth Pro is generally quite accurate, it’s important to note that features such as canopies or overhangs might be mistakenly counted as enclosed areas, leading to an overestimation of square footage. The satellite image may also be from before more recent redesigns have occurred. In both these cases, the discrepancies would affect the property’s value.
3. Dependent on Data Quality: The accuracy of desktop appraisals heavily relies on the quality and completeness of the data available, which may vary depending on the sources used. Inaccuracies that were grandfathered into the data may not be verifiable, and so then end up being carried forward, uncorrected.

Virtual Valuations

What is a virtual valuation? Innovated by Centurisk during the onset of COVID, virtual valuations became a way to gather insurance property data without onsite access to buildings. Unlike typical desktop valuations, virtual valuations focus on confirming data in a thorough, exacting fashion. The key is in our highly coordinated communications with customer contacts, via conference calls. Together, we go over each property for appraisal using Google Earth Pro and other technologies, verifying all data points as a group. (Learn more about virtual valuations here.)

Pros

1. Integrated Technology: Virtual valuations leverage technology such as satellite imaging, and online communication platforms to provide comprehensive property assessments remotely. This lets us perform data collection like examine roof and building structure, calculate property length and width, check proximity to fire hydrants and firehouses, and view property-in-the-open.
2. Balanced Efficiency and Accuracy: Virtual valuations offer a balance between efficiency and accuracy, combining the convenience of desktop assessments with the depth of detail provided by onsite inspections. This is accomplished through close communication with customer staff, verifying all the collected data.
3. Reduced Disruption: Property owners can undergo the valuation process without the inconvenience of accommodating onsite visits, streamlining appraisal time and minimizing disruption.

Cons

1. Coordination Challenges: While a virtual valuation doesn’t require coordinated site visits, virtual valuations may still require significant coordination efforts, including scheduling calls, ensuring access to relevant data, and facilitating communication between appraisers and property owners. Calls can be lengthy, depending on the number of buildings to review.
2. Technologically-Dependent: The accuracy of virtual valuations relies on the effectiveness of the technology used, including the availability and quality of satellite imagery and virtual tour platforms.
3. Limited Personal Interaction: While virtual valuations offer convenience, they may lack the personal interaction and richness of communication found in onsite assessments, potentially impacting the depth of understanding between appraisers and property owners.
4. Dependent on second-hand information: The human memory is fallible. So while contacts may genuinely believe they’re sharing accurate information, sometimes inaccuracies do creep in which can’t always be verified by the appraiser. There’s no real replacement for first-hand observation, on-site, by a knowledgeable appraiser.

Find the Right Balance for You

The choice between a full appraisal onsite, a desktop appraisal, or a virtual valuation depends on various factors such as time constraints, budget considerations, property complexity, and personal preferences. The right answer for your organization may lie in a combination of the three techniques, set at different valuation thresholds. At Centurisk, we’re happy to consult with you on your options, listen to your needs and help determine the services to maximize your budget, meet valuation goals, and help you gather the data you need for the road ahead.