How Is the Building Value Determined

BUILDING VALUE

HOW IS THE BUILDING VALUE DETERMINED

WHY IT IS IMPORTANT TO INSURE TO FULL VALUE

HOW DO I GUARANTEE THE ASSOCIATION IS INSURED TO FULL VALUE

How is the building value determined?

Upon a physical inspection of the Associations property, building data such as square footage, type of construction, building life safetyequipment, etc, are used to develop replacement cost or reproduction costs and insurable values of buildings and other improvements.

The system most recognized throughout the US is Marshall & Swift. This system

determines replacement costs of any commercial structure or improvement.

Marshall & Swift cost data includes the cost of labor, materials and installed components. Marshall & Swift has the single most comprehensive database in the marketplace.
Why it is important to insure to full value?

Throughout the Chicagoland area there have been several severe losses i.e., Chicago High Rise fires, a fire in a Buffalo Grove Condominium, a fire which caused a total and complete loss of a Condominium Building in Evanston, a wind storm in Plainfield, and a . Whether those properties are insured adequately depends on the type of coverage they purchased and that magic ratio, Insurance to Value (ITV).

Policy forms have changed and evolved in response to court interpretations, Illinois Condominium Law, insurance market conditions and changes in building stock. Likewise, property ITV estimating methodologies have changed, driven by the need for property values that represent the fullest exposure a carrier may experience in the event of a loss.

The Illinois Condominium Property Act states that coverage must be insured at “100% replacement cost”. The only way to ensure that your Association is in compliance with the Act is to have an annual Appraisal, which can get costly. Even then there is a 10% margin for error in any Appraisal, including Marshall & Swift. The only way to be confident that your Association has a policy that is compliant with the Act and more importantly provides enough coverage in the event of a large or total loss, is to obtain a policy with a true “Guaranteed Replacement”.

A true Guaranteed Replacement means that your policy would not have a limit of insurance shown, it would simply state “Guaranteed Replacement”. This coverage guarantee the Insurance Company will replace your Association structure(s) to the same like, kind and quality without a limit. In addition to this coverage, you need to have Ordinance & Law coverage to insure any Municipal Code changes and increased costs of construction due to code changes, i.e type of electrical wiring, fire alarm systems or life safety upgrades would also be covered. Ordinance & Law is also required by the Illinois Condominium Act.

How do I guarantee the Association is insured to full value?

The Illinois Condominium Property Act states that coverage must be insured at “100% replacement cost”. The only way to ensure that your Association is in compliance with the Act is to have an annual Appraisal, which can get costly. Even then there is a 10% margin for error in any Appraisal, including Marshall & Swift. The only way to be confident that your Association has a policy that is compliant with the Act and more importantly provides enough coverage in the event of a large or total loss, is to obtain a policy with a true “Guaranteed Replacement”.

A true Guaranteed Replacement means that your policy would not have a limit of insurance shown, it would simply state “Guaranteed Replacement”. This coverage guarantee the Insurance Company will replace your Association structure(s) to the same like, kind and quality without a limit. In addition to this coverage, you need to have Ordinance & Law coverage to insure any Municipal Code changes and increased costs of construction due to code changes, i.e type of electrical wiring, fire alarm systems or life safety upgrades would also be covered. Ordinance & Law is also required by the Illinois Condominium Act