Water and wastewater treatment plants are critical infrastructure in our communities; when they’re inoperative due to a loss event, the communities that depend on these services can struggle. Yet due to the systems’ complexity, these vital properties are often improperly valued on property schedules. Commonly, these values are reduced to a single line, which fails to acknowledge the many working parts in the diverse system. When one portion of the system suffers a loss, replacement cost becomes more difficult — and more time-consuming — to pin down. This puts states, risk pools, and municipalities at financial risk and may require additional loss negotiations that waste even more valuable time. Accurate insurance appraisals are the key to safeguarding operations, streamlining recovery, and maintaining budget stability.
Property insurance appraisals play a crucial role in ensuring accurate insurance placement, financial protection, risk mitigation and management. Whether for commercial buildings, municipal infrastructure, or specialized facilities like water and wastewater treatment plants, thorough on-site valuations can help organizations like states, risk pools, and municipalities achieve two important goals. They help avoid over- and underinsurance problems, and they act as a benchmark for proof of loss substantiation in the case of a risk event.
Critical infrastructure assets, such as water and wastewater treatment plants, require specialized property data to ensure organizations get the right amount of coverage for managing physical and financial risk exposures. It’s their complex operations, unique equipment, and the stringent regulatory requirements they face that demand a more tailored approach to appraising and insuring these facilities. Additionally, because communities depend so heavily on these facilities for safe drinking water and proper sanitation, there’s little room for downtime in the event of a loss. At loss time, it’s too late to learn your organization isn’t covered for all the repairs you need – especially, when your community depends on the services you provide for daily life. Who wants to spend time negotiating coverage issues, when swift recovery should be the priority? It’s only by having the right coverage from the start, you can help ensure your operations are up and running again, as quickly, smoothly, and safely as possible.
Centurisk has decades of experience appraising unique structures like water and wastewater treatment plants. Our experts gather the data that insurers need most, and our valuation process incorporates data and analytics from several key resources: proprietary software, the Producer Price Index, and factors from American Cities & Counties. This property and valuation data empowers insurers with the ability to make more accurate risk assessments and ensure organizations secure the proper amount of insurance.
“At loss time, it’s too late to learn your organization isn’t covered for all the repairs you need – especially when your community depends on the services you provide for daily life.”
When dealing with a diverse array of property types on your statement of values (SOV), having a detailed, informed on-site property valuation for all structures is important to your loss control strategy. Smart organizations should choose an appraisal firm with a proven track record of appraising unique facilities, whether it’s water/wastewater treatment plants, historical buildings, arenas, or other specialized structures.
It’s also important to select an appraisal firm that follows Uniform Standards for Professional Appraisal Practice (USPAP) guidelines, to be certain your valuation firm is gathering the details insurance companies need to provide accurate insurance coverage.
At Centurisk, we have decades of experience valuing a wide range of unique structures, including water and wastewater treatment plants, and understand the specific challenges organizations face when their data is being collected by firms without that industry expertise. Our team understands how the little details truly add up, affecting property values and ultimately your coverage. We’ve seen how greater data accuracy becomes the key to building greater trust with insurers, and it’s this trust that can lead to better ratings and even better rates.
On the other hand, if you fail to provide thorough data, insurers must base their decisions on the information provided, which often means they must assume the worst-case scenario to reduce their financial exposure, whether the property actually has those worst-case scenario levels of exposure or not.
An additional challenge for both insurers and insureds is that property value tends to be a moving target. With fluctuations in construction costs and materials due to labor shortages, global inflation, and other factors, keeping up with property values has become exceedingly difficult in recent years. In a 2023 study of U.S. property appraisals, 90% of buildings studied were underinsured, with 68% of the buildings valued from 2020 to 2021 underinsured by 25% or more.1 Add to that the extreme weather events like wildfires, hurricanes, and flooding, which drove economic losses to $117 billion in the first half of 2024, 2 insurers now must be more selective about which organizations they choose to insure and in which locations. This puts insureds at a disadvantage because they now must compete for insurance placements. To remain competitive, it is crucial for an organization to present accurate and trustworthy data to its insurers at renewal time.
Accurate appraisals are essential for ensuring that your water/wastewater treatment plant isn’t under- or overinsured, both of which are financially irresponsible. Underinsurance can leave your organization with inadequate coverage, coinsurance penalties, and unexpected budget shortfalls when repairs or replacements are needed. Conversely, overvaluation can lead to unnecessarily high insurance premiums, draining resources that could be better applied elsewhere. This commonly happens to water and wastewater treatment plants in a way that’s somewhat different than with other properties.
Under- and overvaluation commonly occurs when water/wastewater treatment plants are listed as a single line item on a statement of values (SOV). These plants are complex systems made up of multiple components, such as aeration tanks, clarifiers, digesters, and other specialized infrastructure (we’ll talk more about those details in the next section of this white paper). To accurately reflect the value of each part, these systems should be valued individually. Bundling all components together can make it difficult for insurers to determine replacement costs, leaving them to make assumptions that could result in gaps in coverage or inflated premiums.
Water and wastewater facilities also often require specialized materials, engineering, and labor, resulting in higher replacement costs for the structure itself compared to its contents. By calculating the value of contents separately from the structure’s replacement cost, then combining it, valuation specialists can ensure more accurate coverage and prevent underinsurance. This also helps customers avoid overvaluation and the unnecessarily high premiums that could come with it. With that said, under certain circumstances, insurance policies may include the contents within the building as part of the building’s value. In which case, including the sum with contents would be appropriate.
Another common cause of under- or overvaluation involves assumptions about tank depths. Many process tanks are filled with wastewater or sludge, obscuring their full depth. To avoid making inaccurate assumptions, our experts at Centurisk take the initiative of contacting plant operators ahead of our onsite valuation visit. We provide them with a list of required information, such as depths of aeration tanks, clarifiers, digesters, and chlorine contact tanks, as well as gallon capacities and well dimensions. This gives plant operators ample time to gather the necessary data, ensuring a more efficient site visit and reducing the risk of inaccuracies.
By proactively addressing these issues, we help ensure that your organization is neither overpaying for premiums nor underinsured in the event of a loss. This strikes the right balance between coverage and cost.
The common practice of listing water and wastewater treatment plants as a single line item on a Statement of Values (SOV) can set an organization up for loss. Look at the line item below highlighted in green. The whole water treatment plant expansion is listed there, with no hint of what the facilities include!
The suggested total insurable value is roughly $21 million in replacement costs for this site. Or IS it?
Let’s value the replacement cost of that water treatment plant expansion individually…
$61 million in replacement costs?! That means you’d be roughly $40 million underinsured—a risk no municipality can afford to take.
As we discussed, accurate property data is essential for ensuring proper insurance valuation and coverage. So while your chosen insurance appraisal firm should collect the standard ISO/Verisk classification data and primary and secondary COPE details for an organization’s wastewater treatment plants — as they would for any other structure they appraised — these plants require some specialized data, too. By understanding what your appraisal firm should be looking for, you can better assess the quality of your chosen firm, the quality of the data you receive, and pinpoint any gaps before you submit your statement of values. The appraisal firm you ultimately select should have a thorough understanding of the following common plant processes and important elements for documentation:
Wastewater treatment involves a series of processes to remove contaminants from water before it is returned to the environment or reused. In the infographic below, you can see the many different processors and phases wastewater goes through, and the diverse and beneficial ways that output can be reused.
The process is generally divided into several stages:
Below is an explanation of each stage:
The first step in the wastewater treatment process is to remove large debris and materials from the incoming wastewater. This is typically done through screening, where wastewater is passed through large screens to remove solid objects like sticks, leaves, and plastics. Additionally, grit chambers are used to settle out sand, gravel, and other heavy particles. The purpose of this stage is to protect the equipment downstream and ensure that the subsequent treatment processes can operate efficiently.
Primary treatment focuses on the removal of solid materials that are easily settled. The wastewater is passed through large sedimentation tanks where primary clarifiers allow solids to settle to the bottom, forming sludge, while oils and grease float to the top and can be skimmed off. This process removes a significant portion of suspended solids but does not eliminate dissolved pollutants. The primary treatment typically removes about 60-70% of the suspended solids.
Secondary treatment is a biological process designed to remove dissolved and suspended organic matter that remains after primary treatment. This is typically accomplished using biological filters or activated sludge systems. In the activated sludge process, air is pumped into aeration tanks to encourage the growth of bacteria and microorganisms that break down organic pollutants in the water. The treated water then flows into secondary clarifiers, where the solids are allowed to settle out. Secondary treatment significantly reduces the biochemical oxygen demand (BOD) and suspended solids in the effluent.
Tertiary treatment is the final step in the process and is used to further improve the quality of the effluent. It may include various processes, such as filtration, disinfection (commonly using chlorine or ultraviolet light), or advanced chemical treatment to remove any remaining nutrients, pathogens, or pollutants. This stage ensures that the treated water meets the necessary environmental standards before being released back into the environment or reused.
The solids produced during primary and secondary treatments, including sludge and biosolids, are processed in a separate stream. Solids processing involves several stages to reduce the volume, stabilize the material, and make it safe for disposal or beneficial reuse. This process typically includes thickening (concentrating the solids), digestion (biological treatment to break down organic matter), and dewatering (removing excess water). The treated solids are then either disposed of in landfills, incinerated, or repurposed for agricultural use as biosolids. The goal of solids processing is to manage the waste generated during treatment and reduce its environmental impact.
As you can see, these are significantly involved and unique processes that use specific industry equipment to achieve the correct results for each phase of wastewater treatment. Each phase can translate to very specific property losses and replacement costs for the equipment involved in each treatment stage. This is why, when organizations document the property as a single wastewater treatment plant line on their statement of values, it fails to capture the full picture.
Water treatment is a process that removes contaminants from raw water to produce water that is safe for human consumption and other uses. The treatment process generally involves several stages:
Below is an explanation of each stage:
The first step in water treatment is coagulation, which involves adding chemicals (coagulants) such as aluminum sulfate or ferric chloride to the raw water. These chemicals help to destabilize the particles in the water, causing them to clump together into larger particles known as flocs. This process is followed by flocculation, where the water is gently mixed to allow these flocs to form and grow. The goal of coagulation and flocculation is to remove suspended particles, including dirt, bacteria, and algae, that make the water turbid.
After coagulation and flocculation, the water moves into sedimentation tanks, where the flocs are allowed to settle to the bottom by gravity. The water then moves through a series of clarifiers, and the settled particles, known as sludge, are removed from the bottom. This process significantly reduces the suspended solids in the water.
Once the large particles have settled, the water passes through filtration systems. Filters typically consist of layers of sand, gravel, and sometimes activated carbon, which help to remove smaller particles and impurities. Filtration may also include the use of membrane filters for finer removal. This stage ensures that the water is clearer and free of most remaining particles, including bacteria and smaller pathogens.
After filtration, the water undergoes disinfection to kill or inactivate any remaining harmful microorganisms such as bacteria, viruses, or protozoa. This is usually achieved by adding chlorine, chloramine, or ozone to the water. Ultraviolet (UV) light is also increasingly used as a disinfection method. Disinfection is essential to ensure the water is safe for consumption and free from harmful pathogens.
In some cases, additional advanced treatments may be used to further purify the water, especially if it is being prepared for sensitive uses such as industrial processes or if the water source is highly contaminated. These advanced treatments may include activated carbon filtration (for removing organic contaminants), reverse osmosis (to remove salts and other dissolved substances), or ion exchange (to soften water by removing minerals like calcium and magnesium).
As with the wastewater treatment process, you can see how water treatment involves different stages of filtration with specialized equipment to complete each discrete task. And once again, you can understand how valuing the property associated with each of these functions as one bundled total value for a water treatment plant makes determining replacement costs after a loss event difficult and significantly increases the potential for underinsurance.
Ultimately, this information helps us ensure the most robust, up-to-date, and accurate insurable values. By knowing the thinking behind your values, you can feel more confident about the valuations you receive.
There’s more than meets the eye when appraising water and wastewater treatment plants. These five practices can help ensure you get an accurate valuation and better insurance outcomes.
When you’re dealing with highly specialized structures like water and wastewater treatment plants, it’s important to work with professionals experienced in appraising this unique infrastructure. By selecting a valuation firm with a background in this specific industry, you increase the accuracy of both your replacement cost estimates and risk assessment.
Specialists are uniquely able to identify hidden vulnerabilities in complex machinery and treatment processes that standard appraisers can’t. This helps improve your data quality and gives insurers more confidence in your numbers.
Remote estimates can’t replace boots-on-the-ground inspections. In-person visits uncover issues like inaccurate tank depths, outdated building materials, or site-specific risks such as flood zones and seismic activity. They also ensure that mechanical, electrical, and treatment systems are properly assessed.
Tools like Google Earth Pro can provide perimeter data, distances to hydrants, and square footage estimates. Supplement these with original blueprints and modeling tools to simulate performance during risk events.
Blending old-school data with new tech helps fill gaps and reduce assumptions, making valuations far more accurate.
Even the best valuations lose relevance over time. Schedule on-site appraisals every 3–5 years to stay current.
Better still, use a centralized platform like RiskStar to manage property data across departments. RiskStar offers user-based update tracking, photo/document links, and full version history — making it easy to stay organized and audit-ready.
Not all appraisals are created equal. If your firm can’t clearly explain how your replacement cost is calculated, that’s a red flag.
At Centurisk, we rely on robust sources like proprietary software, the Producer Price Index, and data from American Cities & Counties. These inputs help us capture building trends, material costs, local market shifts, and environmental factors to deliver defensible, accurate valuations.
A valuation partner with a background in appraising water/wastewater treatment plans is uniquely able to identify hidden vulnerabilities in complex machinery and treatment processes that standard appraisers can’t, helping improve your data quality.
“Centurisk performed a valuation project for many members in our Public Risk Pool At the beginning of the project, we agreed on communication protocol, types of reports, and specific details, as well as the need to over-communicate with each member for whom appraisals were being conducted. The field personnel were professional, on time, and efficient in obtaining the data they needed. When there were unique structures, Centurisk personnel actively listened to our members and adapted their valuation methods as appropriate. The end product exceeded our expectations. Overall, our members were very satisfied with the end product. I would highly recommend you consider Centurisk when you are in need of property valuation services.”
– Larry Bailey, Executive Director, WSRMP
Water and wastewater treatment plants require a nuanced approach to property data collection, appraisal, and insurance valuation. By focusing on structural details, specialized equipment, and operational risks, organizations can improve risk assessment and avoid over- or under-insurance. Following best practices for appraisal further strengthens an organization’s financial protection and resilience against potential losses. States, risk pools, municipalities and insurers must work together to safeguard these critical assets, ensuring their long-term functionality and reliability.
For more information on appraising water/wastewater treatment plants or to discuss appraising the plants on a property schedule you handle, contact Centurisk today.
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