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What is an Insurance Appraisal? An insurance appraisal is a replacement cost analysis which provides an accurate estimate of the amount of insurance required to replace each structure and/or amenity exactly as it stands on the day the report was prepared. The appraisal provides both a hazard and flood insurable value (if the property is in a flood zone). Engineered Tax Services (ETS) calculates each buildings reproduction cost on a component-by-component basis from the ground up. Our software processes the complex calculations needed to correctly estimate the labor and material costs for each building component and system. Our software also calculates the taxes, fees, overhead, and profit to provide an accurate estimate of what it would cost to reproduce the structure today. ETS may be able to take advantage of additional savings from our report as it relates to your property insurance. Our detailed engineering report can eliminate the guess work that goes into underwriting property casualty policies. Realistically, the guess work never works to your favor. There is also potential savings in shifting insurance rates from real estate assets to personal property assets.
Most property owners, managers, boards, and/or insurance agents believe that obtaining an insurance appraisal for their property is one of the best decisions they have ever made. The reasons for this are simple:
All digital photographs taken at the time of the physical inspection are electronically archived for the clients use in the event of a loss.
When a historical property is renovated and there is a focus on energy conservation and green construction, the property may qualify for Energy Tax Credits. While these credits cannot often be used by the holders of historical properties, they can be “gifted” to the architect or contractors involved in the restoration. These credits can range from between $0.60 and $1.80 per square foot.
A courthouse was valued to determine the insurable value; the property was well over 200 years old and had musket holes from three wars (1776, 1812, and 1864). In addition, the property had just been fully restored. The county that owned the property proudly boasted that they had spent over $15 million to restore the property and were upset the valuation came in at around $5 million. The original policy was for the “Functional Replacement Cost” with an option for Actual Cash Value, if the property was not replaced. The property was valued a second time. While working with their carrier to treat the property as “historical,” the valuation still did not meet the property owner’s expectation – even though the value in the report more than doubled.
The solution was a combination of education and loss control. It is generally easier to create a replica of the property in the event of a total loss then to refurbish an existing property. Some of the elements of the property, such as the bullet holes, could never be replaced and so a display showing the holes was made and placed inside the property. A replaced section of the old courthouse was recovered and used to make the display.
We also recommended high quality documentation of the property, focusing on any filigree to help in restoration in the event of a loss. By working with the property owner and the carrier, we were able to meet their expectations and needs. More important, this valuable part of American history was better protected. Modern restoration needs to take into account not just the historical nature of the property but the green elements of construction; many of today’s restorations strive to be LEED certified buildings. ETS is uniquely qualified to help meet these needs too.