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Insurance Value?

Discussion in 'General Appraisal Discussion' started by YFA72, Oct 18, 2010.

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  1. YFA72

    YFA72 New Member

    0
    Jul 4, 2010
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    We have a request to estimate Insurance Value. M&S/Local Costs seem to be obvious & valid sources of data. But what format for the report is appropriate?
     
  2. Michigan CG

    Michigan CG Moderator Staff Member Moderator

    297
    Nov 1, 2006
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    Be very careful to check the disclaimers on Marshall and Swift.........
     
  3. Elliott

    Elliott Elite Member

    59
    Apr 23, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Oregon
    "Insurance Value"....guess it depends on how the policy reads. It could be
    ultimately based on 'market value' or 'replacement cost' or 'reproduction cost.'
    I'd go survey 3 builders and find out what their build costs are for a house
    similar to your subject and use the high end of the range.
     
  4. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    446
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    Many insurance estimating programs use something called "Reconstruction Value"....and it will be substantially higher than Replacement Cost New...about 20% more
     
  5. BOCK FOLKEN

    BOCK FOLKEN Member

    0
    Jun 22, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Ditto to this. Standard M&S wont get you there. I'd go with the suggestion of getting builder quotes. Also, as it has been explained to me by my agent, the insurance value also attempts to take into account the potential that in a natural disaster, the system will be over taxed and the labor and materials costs will go WAY UP.

    For example, I know a recent cost example where the insurance value was $530,000 for the house. The M&S value for the same house was $325,000. The insurer finally accepted the figure of $425,000 because the owner did not want to pay the ridiculous premium for $530,000.
     
  6. nauthead

    nauthead Senior Member

    17
    Nov 26, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    M&S has a specific software for this type of cost. If you use the regular M&S you are violating the end user license agreement so be careful how you handle this. Fannie Mae forms or the GP form are not a good idea. A narrative format is what I use.
     
  7. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    446
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    The old M & S Boeckh system converted most of Boeckh to insurance. Boeckh software alllowed for each use. And, yes, it assumes that reconstruction will be more expensive than if the building was never there which is the premise of Replacement Cost
     
  8. Zambendorf

    Zambendorf Sophomore Member

    0
    Jul 7, 2008
    Professional Status:
    IT Professional-Appraisal Related
    State:
    Florida
    Insurance Tools

    You can access the Marshall & Swift/Boeckh insurance valuation tool for residential properties at accucoverage.com ($8).
    You can cross-check at e2value.com, especially if its a high valued home.

    Asking the local builder will be inadequate.
    - builders typically think in terms of new construction, not reconstruction.
    - builders estimates (and M&S) is based on economies of scale with tract home construction, not applicable for loss recovery
    - while the builder would give you a cheap estimate because of the current economic climate (appropriate for cost approach) - what they'd charge when there's a smoking hole in the ground and the buyer is desperate and the insurance company has the checkbook are miles apart
    - the client needs documentation they can present to the underwriter that will be acceptable - insurance companies use MSB tools (not M&S)

    Don't deduct for the foundation unless you've read the policy to verify its not covered (and it should be covered if the agent is doing their job).

    Check your E&O to verify you're covered for this type of project - don't assume.
     
  9. Denis DeSaix

    Denis DeSaix Elite Member

    234
    May 16, 2005
    Professional Status:
    Certified General Appraiser
    State:
    California
    Bluebook, which started out as an insurance cost estimator, also provides a product for appraisers. There is an appraiser-module report that is titled "insurable interest" that can be used (as far as I know) for insurable value.

    Of course, they also have very specific insurance estimators as well.

    Here's their link: http://www.bluebook.net/solutions/appraisers-inspectors.php

    I've used this product for two-years and am very satisfied with it. You can call them and describe your situation; they'll be happy to tell you if they have a product that suits your needs.


    Good luck!
     
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