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The diverse coverages within your personal or commercial insurance policy are like a multifaceted puzzle— each piece purposeful, customized to cater to your individual requirements. Among this breadth of coverage, there is a critical factor that provides the foundation for your unique insurance protection: replacement cost value (RCV).

replacement cost value

the amount of money needed to repair or replace your property at today’s prices of construction, materials, and labor – taking into account various factors such as the size, materials, construction type, and location of property

Why are accurate replacement cost values so important?


Protecting Your Investment
Your commercial or personal property is a significant investment.  Accurate valuations help align your insurance coverage with the property’s true value. This helps ensure you are adequately protected in the unfortunate event of a loss.


Staying Current
The world around us constantly changes. Inflation, increased material costs, and market fluctuations impact the value of properties. Regularly reviewing replacement cost values helps counter these changes, ensuring your coverage keeps pace with the current market conditions.

Replacement cost values should be evaluated every year.


Ensuring Adequate Coverage
Underinsuring your property poses substantial risks. In the event of a catastrophe, insufficient coverage could lead to financial strain and hinder your ability to rebuild or repair your building to its pre-loss condition. Updated valuations prevent such scenarios, offering peace of mind during challenging times.


Facilitating Faster Recovery
When the RCV of your property is up-to-date, less back-and-forth is required should you need to file a claim. This allows for a more seamless claim negotiation, enabling you to recover and return to business-as-usual as soon as possible.

Claim Scenario

  • In 2018, a modern apartment building was estimated to have a replacement cost value of $1.2M. Per the policyholder and agent’s request, we set coverage limits at $1M with 80% coinsurance, which seemed adequate at the time.
  • In June 2023, an updated replacement cost valuation appraised the property at $1,678,000.  The limits were increased to $1,342,166 at renewal to maintain an 80% coinsurance level.
  • In September 2023, the property sustained a devastating fire in excess of $1M. Had the coverage not been increased to properly reflect the current replacement cost of the building, the policyholder would have had a large uninsured loss.

The above claim underscores the critical importance of accurate valuations. Had we not updated the coverage to reflect the property’s actual value, the financial aftermath of this incident could have been even more devastating for the policyholder. Accurate and updated RCVs serve as a safety net – ensuring proper coverage in the face of unforeseen disasters. 

We aim to work closely with our agents to continuously analyze coverages for accuracy and provide the best possible protection for each policyholder’s unique needs.