Lender Requests for Replacement Cost Values and/or Replacement Cost Estimators
This below is the advice from our E&O Carrier.
Recently, we have seen lenders asking insurance agents to directly supply them with replacement cost estimators to verify that coverage is equal to the replacement value of the property. It is advisable for agents to direct the lenders to obtain replacement values from the client. As an agent, you can supply the replacement cost estimator to the client if they request it. Be sure to include a disclaimer such as the following:
Disclaimer:
The information outlined in the Replacement Cost Worksheet is an estimate of a dwellings value based on information provided by the policyholder. This replacement cost figure was evaluated using industry standard software which calculates replacement cost values. The actual cost to rebuild or replace a dwelling may exceed the limits outlined in the Replacement Cost Worksheet. This estimate is used for information purposes only and the agency does not guarantee that the policy limits provided will be adequate to rebuild the structure. The policyholder has the option of retaining a professional appraisal if there is a question as to whether the replacement cost number is adequate.
Here is a list of sources you can refer the client to for appraisals per Ohio Insurance Agents:
- www.appraisalinstitute.org
- www.appraisers.org
- State/provincial licensing boards, e.g., Independent Appraisers
- Other alternatives: reconstruction cost estimates by licensed general contractors, architects, or engineers.
Here is what we are to do when a lender requests a RC value and/or a copy of the RC Estimator:
- Advise that we can only give copies of the RC Estimator at the direct request from the client.
- If/When a client requests, include the below letter with Disclaimer
- Replacement Cost Estimator Worksheet Letter to Client (A copy is in the “Letters” templates in Hawksoft.
Sample Letter to Insured with Disclaimer – See Below: