PERSPECTIVES / PROPERTY UNDERWRITING

Functional replacement cost vs. replacement cost

A practical distinction when evaluating specialized commercial structures and valuation terms.

Choosing the valuation basis

Replacement cost generally considers repair or reconstruction with materials of like kind and quality, subject to policy terms. Functional replacement cost may consider a less costly but functionally equivalent structure where appropriate and approved.


For architecturally significant properties, the choice can materially affect the insured value and claims expectations. Brokers should discuss the proposed basis and supporting documentation early in the submission process.

Iconiq Insurance

Specialty commercial property underwriting, informed by the building.

SPECIALTY COMMERCIAL PROPERTY MGA

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