Frequently Asked Questions
We understand that church and nonprofit building valuation is a specialized topic. But given its importance, we want to provide the resources for you to better understand it. Below are some common questions and answers. If you have other questions, please contact us.
Questions
Q: What is an insurance building valuation?
A: A building valuation is the amount for which your building and its contents are insured. It reflects the cost to reconstruct your facility should it be destroyed.
Q: How is an insurance building valuation different from an appraisal or other types of valuations?
A: A building valuation is the amount for which your building and its contents are insured. This definition separates it from better-known measures such as resale value (a real estate term) or assessed value (a taxation term). A building valuation is 100% concerned with the value an insurer assigns to your property. This value should result in an amount that equals the cost of reconstructing your building.
Q: Should a building valuation be recalculated? And how often?
A: A building valuation is an evolving number that should be revisited every two years. If your house of worship or nonprofit expands, then its valuation needs to be updated to reflect the change. In addition, market factors such as the cost of materials and labor impact a building’s replacement value. When changing costs are not acknowledged, the client loses ground to inflation and will likely lack funds when it’s time to reconstruct a facility.
Q: How is a building value determined?
A: Many insurance policy holders assume a building’s insurance value is a fixed dollar amount. It is not. Why? Because fluctuating variables such as inflation, labor cost and evolving regulations make assigning a strict dollar amount arbitrary and unfair to the policy holder. The cost to rebuild five years from now will undoubtedly be higher, making a locked-in settlement amount unrepresentative of the cost of reconstruction.
A building’s insurance value is determined by multiple factors, including its size, age, number of stories and unique architectural features. If the building has been expanded or renovated, this also influences its insured value.
Building value calculations also incorporate property that’s not part of the building itself (often called business equipment or “non-structural items”). These are components that are integral to your facility such as stained glass windows, pipe organs, pews, audio-visual systems and solar panels.
The totality of these factors, as documented in your insurance contract, lead to an insurer’s building value.
Q: What factors are frequently omitted from building value calculations?
A: In addition to the failure to include expansions and improvements in insurance documentation, two other reconstruction costs are frequently omitted. If a facility is destroyed, then it will have to be demolished and the materials removed from the property in accordance with local regulations. Demolition and debris removal are non-negotiable components of any rebuilding plan. Failure to include them as part of an insurance policy will mean the client will have to pay for these expenses apart from insurance funds.
Q: Where can I find the exact dollar amount for which my property is insured?
A: Property is insured based on the cost of reconstructing a facility. This cost is constantly evolving (think about construction costs seven years ago compared to today). As a result, a fixed dollar amount is not written into your policy. Rather, a building valuation provides the documentation your insurer needs to create a reconstruction settlement amount. This underscores the importance of providing accurate and complete details to your insurer about all aspects of your building and property.
Q: What are the steps involved in a building valuation?
A: AccuValuations creates a building value based on data including satellite imagery, weather patterns, geographic impacts, photos of the property, county assessor records, construction documents and information provided by the client.
Our process includes:
Surveying and mapping your property
Analyzing your property’s interior spaces
Creating a digital model of your property
Compiling data
Sharing data with the client and receiving feedback
Finalizing and delivering the report
Q: Why are inaccurate building values sometimes submitted to insurers?
A: There are multiple reasons why insurance settlements fail to meet expectations. This underscores the importance of partnering with AccuValuations to ensure your insurance documentation is complete. Reasons for disparities include:
Values are often determined by insurance salespeople. They shouldn’t be.
Building values are often determined by insurance agents who – out of self-interest or ignorance – set the valuation too low. Why would they do this? Because it lowers the premium (price) of insurance and makes a sale more likely. In the event of a catastrophic loss, the client then lacks enough funds for reconstruction.Building valuations are outdated.
Your organization may have developed an accurate facility valuation at the time it was built. However, commercial construction costs and related regulations are moving targets. If your valuation is more than two years old, your organization will benefit by reviewing it.Replacement estimates vs. reconstruction costs
Many valuations are based on replacement estimates. This methodology uses the data in place at the time of a building’s construction (among other flaws). In contrast, reconstruction cost analysis determines how much it will take to rebuild a duplicate facility, taking current prices into account.Business interruption coverage is omitted.
If a building is damaged or destroyed, then business-as-usual stops. A temporary meeting place, office space and other expenses beyond reconstruction will be required. Many facility valuations lack this critical budget item. Part of an insurance settlement must then be used to pay for a temporary meeting place, reducing the amount available for construction.Construction and facility details are omitted or incorrect.
Building measurements are often inaccurate.
Demolition costs are omitted.
Debris removal costs are omitted.
Expanding environmental regulations increase the price of debris removal.
The removal of hazardous materials such as asbestos and lead paint drive up costs.
Unique finishes, surfaces and architectural features were not documented.
Building code changes often result in construction cost increases.
Partnering with AccuValuations protects you from what you don’t know and results in confidence that you have fully accounted for reconstruction costs.