BROWN VALUATION SERVICES, INC.
Commercial and Residential Real Estate Property Appraisers
Most appraisals are Market Value Appraisals. In other words, the primary purpose of the appraisal is to provide an opinion of market value.
Market Value Appraisals are not suitable for insurance purposes. This is because market value includes both land value and building value (Assuming the property is not land only). However, property insurance does not cover land value or most site improvements. Furthermore, a market value appraisal involves a depreciated building value estimate for the building, not a replacement cost new.
Unless the property is new or recently built, it is unlikely that the market value appraisal will even include a separate estimate of the building replacement value. This is because the Cost Approach loses accuracy as the building ages. For this reason, appraisers will often omit the cost Approach for older buildings.
As you can see, attempting to utilize a market value appraisal for insurance purposes is a best problematic; at worst, it can result in a gross under-insuring of a property.
The Insurable Value Appraisal focuses on the replacement cost new of the building. Brown Valuation Services, Inc. can provide an Insurable Value Appraisal for insurance purposes.
Don’t risk being under-insured. Call us for more information on Insurable Value Appraisals.