Challenges of Property Appraisals

Accurate coverage begins with proper recording and data. However, in the water and wastewater industry, there can be a few challenges with property appraisals. 

You can find a full breakdown of this information in our recent contribution to Water Asset Management, but below we will be covering some of these challenges. 

“Property typically found in utility operations can be difficult for underwriters to comprehend and frequently large gaps exist between the level of understanding possessed by the insurer and the insured’s comprehension of policy language. Bridging that gap is essential for effectively insuring these assets.”

Challenges of property appraisals: 

Valuation Challenges

There are several options when it comes to property valuation techniques and tools. However, there are no models for water treatment plants or clarifier tanks. There currently are no credible subscription-based resources available for the water industry. Reliable proprietary data is key in order to accurately estimate risks in this industry. 

Underwriting Challenges 

Property underwriters regularly struggle to understand what it is they’re being asked to insure because of lack of proper documentation. Some common discrepancies include:

  • How much of a project was replaced?
  • What was previously there?
  • How much of the total is truly insurable?
  • What portion should be allocated to different property designations?
  • How much should be excluded from coverage? 
  • Are there various construction classifications involved? 

Policy Exclusions 

Commercial policy language typically says that certain portions of an exposure must be excluded from coverage. However, in a utility environment, these issues can become muddied. Interpreting the difference between covered and excluded property requires strong attention to detail and experience. It’s vital to reconcile these issues before your appraisal in order to avoid insurance concerns. 

If you find yourself facing any of these challenges, we at HCA are here for you. We have extensive experience conducting policy appraisals in your industry and will ensure you have the accurate data you need. Want to learn more? Reach out to us today.