Property Insurance: Various Types of Appraisals Available to School Districts

A certified appraisal, made by a commercial appraisal company, is undoubtedly the roost accurate and reliable. These companies employ trained specialists whose factual detailed reports eliminate guesswork from the determination of value. Their appraisals are usually supported by detailed descriptions of the buildings, and by lists of equipment and other contents which can lie valuable in providing a Proof of Loss to the insurance company. Appraisal companies will furnish values on both buildings and contents, and ordinarily provide both Actual Cash Value and Replacement Value figures. Some appraisal companies are willing to offer expert testimony as to the value of thee property if it is necessary for a school district to institute court action against the insurance company. Appraisal companies can provide reports which will satisfy the fixed assets accounting requirement. Finally, appraisal companies have standard procedures for updating the property listing and values at regular intervals.

Contractors and architects may have considerable information about school construction costs, but many have little understanding of the exact coverage under the Fire Insurance policy. The contractor or architect must have accurate into mull ion as to the items excluded from insurance coverage, and the proper division between the property classified as building and that classified as contents, if their appraisals are to be reliable. Contractors and architects usually will not appraise contents items. Ordinarily, neither have standard updating procedures to keep the appraisal current.

An insurance company will frequently furnish an estimate of the insurable value of buildings, but will not appraise contents items. Their appraisals arc usually made by field men with little formal training in appraisal work, and their reports are usually based on square foot or cubic foot unit prices. As a result, their appraisals sometimes fail to take into consideration the specific features and construction of the building under construction. Insurance company appraisals are usually qualified by a statement that they are not to be considered binding on either the company or the Insured. In fact, the appraisal prepared by one insurance company may not be acceptable to another company writing part of the insurance on the same premises.

School personnel can develop a valued inventory for contents, which, if properly completed and maintained, will provide adequate insurance values and satisfy the fixed assets accounting requirement with respect to equipment. A pamphlet entitled “Inventory Control of Fixed Assets by School District Personnel” is available from the Division of Educational Management Services. The pamphlet offers advice in this area, and a suggested inventory system complete with record card formats.

There is no easy solution to the problem of proper valuation for insurance purposes. Even experts in the appraisal field may vary by considerable amounts in their opinion as to the value of a given property. This is especially true if the premises involve an unusual form of construction, an quite old, or have been renovated. In any event, the school beard must he prepared to hack up their claims with accurate information from one of the listed sources.