Posts Tagged ‘Insurable Value’
Types of Appraisal Value
When it comes to determining the value of a property, there are a number of types of value that a real estate appraisal can determine. The most common types are listed below.
- Market value is the price at which an asset would trade in a competitive auction setting. Market value is usually synonymous with open market value or fair value.
- Value-in-use is the net present value (NPV) of a cash flow that an asset generates for an owner under a specific use. Value-in-use is usually below the market value of a property.
- Investment value is the value to one particular investor, and is usually higher than the market value of a property.
- Insurable value is the value of real property as indicated by an insurance policy. Generally it does not include the site value.
- Liquidation value may be analyzed as either a forced liquidation or an orderly liquidation and is a commonly sought standard of value in bankruptcy proceedings. It assumes a seller who is compelled to sell after a period of time that is less than the normal market time frame.
By: Present Value
Insurable Value
For any business, it is important to carry various forms of insurance for things like property and equipment. Although an insurance company will establish its own value in order to determine the amount of coverage that is necessary to obtain on their assets, it is also important the business owner knows the insurable value of his/her assets, including buildings and equipment. This type of valuation can be used by businesses and their insurance providers in order to determine the proper amount of insurance to be carried.
For these purposes, an appraiser can determine the proper amount of insurance to be carried to assist in recovery in the event of loss and establish a basis for preparing the required proof of loss in the event of a catastrophe.
Understanding the insurable value of a business can also be helpful for a company that is looking to borrow money to document insurable value because it can give a lender additional peace of mind regarding a loan.
By: Present Value
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