Citizens sets Standards for Insurance Appraisals
With its agent technical bulleting issued in July of 2010, Citizens raised the bar for the quality of insurance appraisals which every condo association and CAM should be aware of.
The reason for the change in requirements was triggered by Citizens discovery that many insurance appraisals resulted in values, which left the condo association underinsured.
One of the most significant changes is the requirement to have an insurance appraisal every 12 months, whereas the State of Florida requires every 36 months. But with this requirement Citizens is able to get rid of “bad” appraisals in the shortest time possible.
To ensure the quality of all future insurance appraisals, Citizens set the following standards:
– All appraisals must now include the appraiser’s name and license number
– The subject property’s year built
– The total square footage of the property
– The number of stories
– Construction analysis of the subject property
Quite frankly, I cannot understand that any insurance appraisal could have been written without these basic items. For commercial policies, like condominium buildings, the following additional standards were set:
– Every structure to be insured must be included in the valuation, including ancillary structures
– The valuation method used to determine the replacement value must be the most accurate selection available as described in the definitions in the software (e.g., a residential condominium should use the occupancy Condominium, w/o Interior Finishes in the MSB BVS software).
– Valuation reports must be based upon the entire building square footage and include all components of the structure (e.g., balconies, walkways, common areas, etc.)
– Construction analysis, including construction details for the walls, floors and roof must be included.
– The construction type used to generate the valuation must be based on ISO construction definitions.
– A copy of the system-generated report (worksheet) must be included with any appraisal.
- Only full, detailed reports will be accepted
- No adjustments can be made to the architect’s fees, labor, material costs, overhead and profit, or construction quality.
- Any adjustments to line items must be done on a report addendum and include a detailed explanation of the reason for the adjustment and how the adjusted value was developed.
These requirements are minimum standards for an insurance appraisal, regardless if for a condominium building or a commercial property. With these requirements Citizens raises the bar and other insurance providers will follow these standards soon. For our next insurance appraisal, regardless if for Citizens or another insurance carrier, you should make sure that these minimum requirements are met to ensure a quality report for your condo association.
If you have questions I can help to answer, please do not hesitate to email or call.
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