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Capture insurance to value at renewal for personal property

The number of renovations has risen rapidly in recent years, increasing pressure to monitor property changes to align premiums with insurance to value.  

This need is magnified by increasing reconstruction costs, rising around 8 percent a year, a significant jump from the typical 2 to 4 percent before the pandemic. Lumber, a primary consideration in reconstruction costs, has specifically gone through historic highs.

With the number of renovations increasing rapidly in recent years, the pressure to monitor property changes has increased to promote premium and insurance to value alignment.

Rerunning replacement cost estimates (RCE) for every property at renewal can be a major challenge. And those estimates may be less reliable if they’re based on data that’s only updated quarterly.

Fortunately, it’s possible to filter specific segments of the portfolio to target the maximum benefits and obtain RCEs that are updated monthly, whether that’s recalculating at renewal or applying a monthly index factor. This can then help you capture premiums appropriate to the risk and help provide your customers with coverage that recognizes their homes' unique characteristics and fluctuating reconstruction costs.

Starting with higher-value homes

One potential opportunity is to focus on higher-value homes in the premium and custom categories:

  • Premium quality grade homes feature top-of-the-line features and design details, including multiple rooflines and complex floorplans.
  • Custom quality grade homes feature complex floorplans, multiple rooflines, and design details like built-in storage, custom lighting, high-end carpet, and expensive flooring.

Nearly three out of four of these premium and custom-quality homes show higher RCEs using an insurance-to-value tool than with an index. About $719 million of premium isn't recognized at an industry level, according to a Verisk analysis using average Coverage A1 and annual premium paid.

Segmenting by property characteristics

You may also want to consider segmenting your portfolio by building characteristics. Beyond quality grade, five specific characteristics generate higher RCEs than an index. These traits include:

  • Stucco exterior wall finishes
  • Metal roof covers
  • Wood shake roof covers
  • Plaster interior wall material
  • Concrete block exterior wall construction

These characteristics can add up to $2.6 billion in unrecognized premium industrywide, according to Verisk estimates.

Capture changes in value by refocusing on renewals

Determining the best strategies for maintaining insurance to value and lessening premium leakage at renewal may vary, depending on business profile. But making the decision to focus on certain traits, like quality grade and specific materials, can be an impactful strategy to help with insurance-to-value alignment.

Life Cycle Whitepaper 2

The Life Cycle of a Property: Uncovering Property Changes and Hidden Risks to Support Insurance to Value

Support insurance to value. Read our latest whitepaper to learn more.

Download the paper

Trish Hopkinson

Trish Hopkinson is product director, 360Value personal lines, for Verisk. You can reach Trish at thopkinson@verisk.com.


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  1. Coverage A refers to damage to a primary structure. 

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