Property Valuation for Insurance: 3 Scenarios to Avoid

Addressing 100% of the buildings and structures listed on a statement of values (SOV) with property insurance valuations can seem like a daunting task. One rule of thumb, sometimes used to make the task more manageable, is to set a threshold. Then, everything currently valued above the threshold will be appraised while everything below it will be left alone.

So, let’s say for example, you choose to set your threshold at $1 million. This might mean you’re addressing approximately 90% of your total insurable value with onsite, physical inspections while only having to touch about 20% of the buildings. *Insert deep sigh of relief*

Not so fast! Unfortunately, the above scenario also means that somewhere around 80% of the buildings and structures on your property schedule will remain untouched! Though convenient, setting an appraisal threshold can leave you open to risks you might not truly be willing to assume.

In this blog post, we’ll take a look at three valuation scenarios we hope you’ll never have to face and then look briefly at the options available for addressing 100% of your total insurable value (TIV) with reliable methods for property insurance valuations.

Scenario 1: That time it cost more than $500k to replace a building listed with a replacement cost value of $98,000

Let’s assume this organization set their threshold at $100,000. They felt pretty confident. After all, they were addressing nearly 99% of their total insurable value with onsite, physical inspections. However, since this particular building fell below the threshold, it was destined to live in an environment of being under-valued well into the future.

Don’t Let it Happen to You: By applying strategies for analyzing your statement of values and addressing your complete property profile with some type of property insurance valuation, you can feel more confident that your property is insured to value.

Scenario 2: That time the members of our risk sharing group realized premiums weren’t being allocated correctly

This is a tricky one but, in our experience, it’s been known to happen! Risk managers across all industries can be faced with the challenge of having to allocate premiums among stakeholders. If you’ve set a threshold for property insurance appraisals, these stakeholders are likely to have varying amounts of TIV above the threshold. This creates a scenario that could lead to an inequality in distribution premiums as a large number of properties may not be included in your analysis.

Show You Care: Your members are likely to care about all of their buildings. So, showing you’re interested too not only helps distribute premiums equitably but also shows you value your membership.

Scenario 3: That time our insurer/re-insurer asked us about some lower valued structures and we didn’t have an answer

The more data you have, the easier it is for insurers and reinsurers to gain a complete picture of your property portfolio, and to better understand your risk exposure. So, if they come to you with questions about your statement of values, and you don’t have clear answers, you can start to erode their confidence in your data. After all, they’re trying to avoid the cost of what could be out there.

Better Data, Better Rates: More complete data might lead to greater confidence/understanding of your risk exposure, which might lead to better rates! And that’s an opportunity you don’t want to miss.

Addressing the Entire Property Portfolio with Onsite Appraisals and Custom Valuation Models

There are many ways to provide property insurance valuations for the entirety of a large property portfolio. One way is to conduct onsite, physical inspections for 100% of the buildings and structures being insured. For many of our clients, this is their preferred approach. In this approach, a valuation consultant visits each property listed collecting relevant data and establishing replacement cost values. The data and values can be delivered via a series of reports or in a robust property risk management software solution. We always recommend the latter as it’s a better way to manage and ensure the integrity of your data going forward.

Now you may be thinking, “I’m not sure I have the budget for that.” The good news is, there are additional options. One option is to break your property schedule into sections and have onsite appraisals completed for one section each year over 2 or more years. Going with onsite insurance appraisal services for 100% of the line items on your SOV is a great approach, and a great way to establish solid baseline values if you’re pretty confident your data is not great!

That said, we’ve got some innovative and cost-efficient ways to address all of the buildings and structures listed on your SOV without having onsite appraisals for every line item. With the AMP Valuation Estimator, custom valuation models are developed for your organization taking into account multiple valuation resources. By considering attributes like zip code, occupancy, ISO construction class, and more, the tool can quickly establish new baseline values for the entire portfolio of a new member, for a single new building, or for buildings below a certain value threshold. It may just be the perfect complement to your existing property appraisal program.

Ready to address 100% of the line items on your property schedule?

To speak with a Centurisk valuation consultant in more detail, email us at

Want to learn more about how Centurisk’s valuation services can help keep you prepared for tomorrow’s big risk challenges? Simply fill out the form below and a member of our team will be in touch!

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