Boards hear two very different numbers for the same buildings: what they would sell for and what they would cost to rebuild. Insurance only cares about one of them. This page shows the difference with your own numbers.
1. Two numbers, two jobs
Tap each card to see what moves the number and what it is for.
2. Sort the factors
Each of these pushes one number more than the other. Pick a chip, then send it to the right side.
Market value
Reconstruction cost
3. See the gap
Insuring to market value, or to a rebuild number that has not been updated in years, leaves the association short on the day of the loss. Enter rough figures for one building to see how the two numbers relate.
What coinsurance does to a partial loss
Most property policies carry an 80% to 100% coinsurance requirement. Carry less than the required share of the rebuild cost and the carrier reduces every claim by the same proportion, not just the big one.
Illustration only. Your policy’s coinsurance clause, deductible, and any agreed value or blanket endorsements control the actual settlement.
4. Why last year’s number is already wrong
Construction costs move every year, and the buildings do not get cheaper to rebuild. A value that was right when the policy was first written drifts out of date quietly.
5. The board’s checklist
Four habits keep an association insured to the right number. Check them off as you confirm each one.
The bottom line
Market value answers “what is it worth?” Reconstruction cost answers “what will it take to put it back?” Only the second one belongs on an insurance policy. We work exclusively with associations and will gladly review your building values against a current estimate. Reach us at associations@myinsurancewarehouse.com.
Learn the rest in HOA Insurance School →