Property Insurance Value Trending

Oct 2014 28 | Posted by naomi.whatley

The property values utilized in GSRMA’s coverage program are automatically “trended” each year. Trending increases or decreases the property values to reflect inflation or deflation of construction, building materials and other costs associated with replacement or repair of damaged property. In most years, the result is a small percentage increase applied to all of your real (buildings, etc.) and personal (contents) property. These trend factors are based on data provided by Marshall & Swift; widely considered the most reliable authority on cost valuations for the real estate and insurance industries.

Trended property values may ultimately diverge from the current insurable value.  This is due to the trend factor being added uniformly to all property of all types in all areas. Since this factor is an average, your specific property, for a variety of reasons, may deviate from the average. If this goes unnoticed over a long period of time, the compounding effect of the applied trend could result in over or under valuing of a specific property.

Based on the actual trending values applied, a property valued at $100,000 in 2005 would currently be valued at $130,480. While this is likely a pretty accurate figure overall, it may be too high or low for a specific property owned by your agency. Therefore, you should make certain to review and evaluate these values each year prior to submitting your data collection.

We do not expect members to be expert appraisers; simply to take a look at the value and contact GSRMA if you feel that a covered property’s value seems inaccurate. We can evaluate the property using a current replacement cost formula to determine if the estimated value is accurate.

As a reminder, GSRMA’s property program features all-risk, full replacement coverage for real and personal property. The values stated on members’ property schedules reflect the estimated cost to replace that item (building, or other scheduled item) with a new item of like kind and quality. Since these values are not depreciated, they may differ from the values your agency maintains on inventory schedules.