Analyzing the Insurance Expense Component

A review of completed income appraisals indicates that appraisers frequently fail to give appropriate consideration to insurance expenses. Examples are presented that show that appraisers should carefully analyze insurance expenses. Comparable properties that have the same square footage, have the s...

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Bibliographic Details
Published in:The Appraisal journal 1990-10, Vol.58 (4), p.541
Main Authors: Anglyn, William Ted, Edmonds, Charles P, Hand, John H
Format: Article
Language:English
Subjects:
Accuracy
Appraisers
Factors
Impacts
Insurance premiums
Insurance rates
Manycompanies
Property & casualty insurance
Real estate appraisal
Sprinkler systems
Statistical data
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Summary:A review of completed income appraisals indicates that appraisers frequently fail to give appropriate consideration to insurance expenses. Examples are presented that show that appraisers should carefully analyze insurance expenses. Comparable properties that have the same square footage, have the same type of construction, and offer the same basic types of services may not necessarily have the same insurance costs. While rate making is best left to the insurance agent, appraisers need to be knowledgeable about the various risk factors that the agent must consider. Such characteristics as the type of fire protection, construction materials, sprinkler systems, fire walls, and credit adjustment factors can drastically influence rates. Tenant mix also can have an impact, and the inclusion of a restaurant causes rates to rise significantly. Relatively small, newer buildings can be insured with business owner policies that provide very low rates.
ISSN:0003-7087