TOTAL INSURABLE VALUE

Total Insurable Value (TIV) is the estimated replacement cost value of the association's improvements being insured. Boards should ask the association's insurance agent what replacement cost he/she assigned to the buildings and how that value was determined.

Undervalued TIV. Establishing the correct TIV is important because the association will be paying the difference in a large loss if the TIV is too low. For example if the cost to replace your buildings is $10 million and you purchase insurance with a TIV of $6 million, the association will likely be required to pay the deductible plus an additional $4 million before the carrier will pay any monies on a total loss from a fire or earthquake.

Appraiser. Accordingly, boards may want to consult an independent appraiser to establish replacement costs for all structures, including any upgrades to the structures.

Updated by ADAMS KESSLER 8/9/2008