Miniature houses on stacks of coins. When a building is insured at its true replacement cost, it is insured to its value. If the building is insured at less than its true replacement cost, then it is underinsured. (Photo: Kanjana/Adobe Stock)

One of the constant challenges for personal lines underwriters and agents involves the issue of insuring to value. Underwriters and agents have long haggled over the proper amount of coverage for Coverage A for many a property. The insurer wants the property insured for the amount it will cost to rebuild it, so they charge a fair premium for the exposure.

Unfortunately, many insureds don’t understand this principle and think the property should be insured at its market value. At times, there is a significant discrepancy between what homes are selling for in a particular neighborhood because of market conditions and the actual cost to rebuild the dwelling as it was before the loss.

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Christine G. Barlow, CPCU

Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.  

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