In our last exam, we were told to look at the appraisal’s replacement cost value or comps (if listed) rather than a tax assessed value when determining the insurable value of residential properties.
Since the appraised value/comps are often older than the tax assessed value, what would you recommend?
A tax assessed value generally isn’t a good indicator of the insurable value.
We agree that it should not be used by itself to determine insurable value but it could be used as a component in an insurable value calculation. Our interpretation has always been that there is a lot of leeway when determining insurable value, provided it is supported and consistent. The Interagency Flood Insurance FAQs indicate that many different methods beyond RCV exist to determine insurable value (for example, demolition value, functional building cost, cost approach, hazard insurance, etc.). Keep in mind that flood insurance doesn’t cover everything and RCV only pays in limited circumstances. Thus, we don’t think it’s correct to only use RCV in all situations.
Join us for the Flood Insurance & the Insurable Value Intersection (Flash Webinar) on July 18, 2019. We will answer all the questions submitted during the live webinar, in writing.
Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar, or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups, and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru.
Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports related!