(A 3-Minutes Read)
Simply put, a property insurance valuation is a calculation (appraisal), carried out by a professional valuer to determine the value of a property for the purpose of insurance. There are certain parameters to take to mind when determining the value of a property for the purpose of insurance.
1. It Assesses Reinstatement Cost Typically. This means that the valuations seek to estimate the cost of reinstating the asset and/or its contents, in a case of loss through fire, demolition or burglary. The reinstatement cost value assumes total or substantial loss.
2. Net Building Cost.
This seeks to estimate the net building cost to reinstate the building, which includes not only the cost of replacing the building but the cost of demolition and debris removal, as well as associated professional fees.
3. It excludes Land costs.
This type of insurance valuation does not typically include the cost of land because the land is usually not destroyed by fire or demolition. This however differs in the case of agricultural land.
4. Varying Insurance Covers.
Regardless of the property value of the asset in question, there are a number of insurance covers available for the property like day one reinstatement, reinstatement plus inflation, reinstatement less wear and tear etc. The property owner or investor would be wise to first determine the type of cover been sought for the property, the tenure and the possible valuation method. However, with the help of professionals, that should be a walk in the park.