Rebuild value appraisal: necessity or expense?


Jan 2023

The importance of a proper appraisal for insurance purposes

We are often asked whether having buildings appraised is necessary for insurance purposes and what effect it has precisely to choose to do so or not. The amount of the claim payment depends in part on the sum insured in the policy, often the rebuilding or demolition value. To ensure that the claim payment covers the actual damage, proper coordination is necessary.

Determining the insured amount yourself

When entering into an insurance policy, the policyholder can choose to determine the insured value himself. The insurer is not involved and the insured amount is then arrived at unilaterally. The insured amount is included in the policy and the premium is calculated on this basis. Saves having appraisal reports drawn up but the consequences of an incorrectly chosen insured amount are then also borne by the policyholder. Indeed, in the event of a claim, the policyholder has to prove the value of the insured interest.

Advantages and disadvantages of self-establishment

When the insured amount is self-determined, it increases the risk of underinsurance. If it turns out afterwards that the value for which the building is insured is lower than the actual value, this will be at your own expense.

Appraisal prevents underinsurance

With a reconstruction value appraisal, the insured amount is determined by an appraiser. Subsequently, this amount is indexed annually so that the equal trend with the increase in value of the object. With an appraisal by appraiser, the policyholder and insurer have agreed that the insured amount is equal to the value of the insured interest. With the policy with appraisal, the insured no longer needs to prove the value in the event of a claim, because that value is already established in the policy.

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