The objective of an insurance appraisal is to provide an estimate of the current replacement cost for the existing improvements. An insurance appraisal does not estimate the market value of the property. An insurance appraisal evaluates only the replacement cost of existing improvements for insurance purposes only.
The Dictionary of Real Estate, Fourth Edition, Appraisal Institute, Chicago, Ill., 2002 defines replacement cost as “the estimated cost to construct, at current pricing, a building with utility equivalent to the building being appraised, using modern materials and current standards, design and layout.”
Replacement cost estimates are produced using the Marshall Swift / Boeckh Commercial Cost Explorer. This costing includes such costs as architects’ and engineers’ fees, plans and plan check, building permits, survey, interest on building funds, sales taxes on materials, site preparation, utilities from structure to lot line, as well as contractors overhead and profit, all of the insurance requirements, and security costs. Expenses excluded by this program include off site costs, interest on the underlying land, and developers’ profit, where warranted.
Appraisal & Updates
Howard & Company can provide an annual insurance appraisal update service. This allows condominium corporations to ensure that they maintain adequate coverage in the face of ongoing change in construction costs.
All insurance appraisals provided by Howard & Company comply with all legal requirements and are recognized by major insurance providers and underwriters.