Replacement Cost Estimator

Replacement cost estimators are essential tools for establishing accurate insured values on apartment buildings. The most widely used estimators in the insurance industry are Marshall & Swift/Boeckh (CoreLogic) and RSMeans (Gordian), which calculate replacement costs based on building characteristics including square footage, number of stories, construction class, occupancy type, age, quality grade, and geographic location. These estimators produce a cost-per-square-foot figure adjusted for local conditions that serves as the basis for the policy's TIV.

For apartment buildings, the accuracy of a replacement cost estimate depends on the quality of the input data. Estimators require detailed information about the building's structural components, mechanical systems, finish quality, and special features such as elevators, underground parking, swimming pools, and clubhouses. A generic estimate based solely on square footage and zip code will understate the replacement cost of a luxury apartment with granite countertops, hardwood floors, and high-end common areas, and overstate the cost of a basic garden-style complex. Owners should provide as much detail as possible and supplement estimator output with contractor input for unusual features.

Insurers increasingly require policyholders to submit replacement cost estimates at new business and renewal, and many carriers run their own estimates to validate the owner's reported TIV. Significant discrepancies between the owner's valuation and the carrier's estimate trigger underwriting questions and may result in co-insurance concerns. Apartment owners should obtain a professional replacement cost appraisal every three to five years and use estimator tools for annual updates between appraisals to keep the TIV current with construction cost inflation.