Lender Requests for Replacement Cost Estimators

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:

• 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.