Valuation for insurance

The sum insured is set on a basis other than market value. If it is chosen arbitrarily, the consequences of a claim fall on you — however many years of premiums you have paid.

Why not market value

For insurance the governing basis is usually reinstatement value — the cost of restoring the property in the same form at the time of loss. It excludes the value of the land and therefore often differs materially from the market price of the property.

For older buildings, depreciation corresponding to physical deterioration also applies. Exactly how it is treated depends on the terms of the particular insurer.

Underinsurance — the most common error

If the sum insured is below actual value, compensation for a partial loss is reduced proportionately. Where the sum covers 60% of value, a loss of BGN 20,000 yields roughly BGN 12,000.

The reverse — overinsurance — is no answer either: you pay a higher premium without recovering more on a claim. An independent valuation puts the sum where it belongs.

Documents required

• Document of ownership
• Current cadastral sketch or plan
• Occupancy permit
• Design documentation for larger properties
• Inventory of equipment, if it is also insured

See also: Real estate appraiser · Pricing · Methodology