The Cost Approach best suited for developing an estimate of the Replacement Cost New (RCN) for insurance placement purposes, as insurance premiums are normally based on Replacement Cost and not market value. The market and income approaches to value are therefore not applicable to the insurance appraisal assignment.
It is recommended that a full insurance appraisal be completed every three years. Having your property appraised frequently will ensure that the most up-to-date changes to construction costs, building codes, and bylaws are integrated into the appraisal. The initial insurance appraisal is a very comprehensive report. Current clients will benefit from an updated insurance appraisal, often at an appreciably lower fee, when the property has relatively remained unchanged. An update will include all changes since the previous inspection and will contribute to the latest insurable value. Ultimately, an insurance appraisal verifies that your property is effectively protected.