Property & Casualty Insights
Getting Property Valuations Right: Practical Ways to Cut Costs and Reduce Risks
FEBRUARY 3, 2026
Accurate property valuations are central to cost control and claim recovery. When values are too low or too high, organizations risk being underinsured at the time of loss or overpaying every year in premiums. Underwriters continue to scrutinize reported values, and restrictive policy language — such as coinsurance, margin clauses, and occurrence limits of liability — can magnify shortfalls when values don’t match actual costs.
The 2026 property market has opened in a more competitive environment, with increased capacity and pricing relief for well‑managed risks. This creates an opportunity to update valuations, strengthen statements of values (SOVs), and negotiate better terms without sacrificing coverage.
Why Valuations Matter More Than Ever
Valuations drive underwriting decisions. Capacity, terms, deductibles, exclusions, and catastrophe modeling all depend on accurately reported numbers. If values are understated, carriers may apply recovery limits and restrictive endorsements that cap how much can be collected at the time of loss — even when the actual rebuild cost is higher. Restrictive valuation clauses can turn rebuilding cost overruns into uninsured losses. To understand how these provisions can erode claim recovery, read our article on accurate valuations and loss limitations.
At the same time, market factors such as labor costs, materials pricing, and supply chain delays have kept replacement-cost valuations elevated. Commercial reconstruction costs have risen nationally year‑over‑year, underscoring the risk of outdated values. The practical takeaway is simple: outdated SOVs increase the chance of penalties and shortfalls, while updated, well‑supported valuations improve recoveries and often help reduce premiums over time.
Case Study: How a Valuation Strategy Improved Costs and Recovery
A multi‑location commercial portfolio faced escalating property premiums and inconsistent deductible language across its layered program. After auditing the SOV and refreshing valuations — including contents and business income — USI corrected under- and over-reported assets, and clarified deductible wording tied to reported values. We also standardized COPE data (construction, occupancy, protection, exposure).
Using updated analytics and location‑level CAT modeling, we identified five sites responsible for approximately 80% of the earthquake loss estimate and collected structural design data to refine inputs. The result: a 40% reduction in the earthquake loss estimate, an $80,000 premium decrease, and broader program improvements that lowered the total cost by roughly $300,000 (18%).
A Straightforward Playbook to Reduce Costs and Risks
Schedule periodic appraisals and include all assets — buildings, equipment, inventory, and business income exposures. Keep detailed records, such as purchase dates, serial/model numbers, capital improvements, and photos. Strong documentation improves claim accuracy and demonstrates diligence to underwriters.
Carriers rely on data sources and models that can provide incorrect property characteristics. Compare results with actual COPE information and local benchmarks like price‑per‑square‑foot trends or business income as a percentage of sales ratios. This reduces errors that can lead to over‑ or under‑insurance.
Identify valuation limits, scheduled policies, and percentage catastrophe deductibles tied to reported values. Confirm how deductibles are calculated (e.g., values at policy inception vs. at time of loss) and push for wording that aligns with your current SOV.
With capacity improving, organizations that present clean, current valuations and strong risk controls can often negotiate lower deductibles, increased limits, improved terms, and reduced exclusions — while still protecting against CAT losses. Shared/layered programs and higher limits are more accessible for better‑managed portfolios in early 2026, as discussed in USI’s 2026 Commercial P&C Market Outlook.
Modeling can help pinpoint which locations drive most of your loss estimate. Gather additional building data (e.g., earthquake design) to materially reduce expected losses and corresponding premiums. USI’s CAT modeling data shows that refined secondary building characteristics (such as earthquake‑resistant design) reduce modeled losses and premiums — in some cases by more than 40%.
How USI Can Help
A well‑engineered valuation strategy can uncover meaningful savings and reduce uninsured loss exposure. USI brings data, analytics, and market expertise together to help organizations achieve those results with:
- Valuation & SOV optimization: USI helps clients establish fair, accurate values using carrier‑grade tools combined with local data and COPE verification — improving claim recovery and often lowering premiums.
- Policy language and deductible analysis: We identify and negotiate changes to coinsurance, margin clauses, occurrence limits, and catastrophe deductibles to reduce uninsured loss exposure.
- Analytics and CAT modeling: USI helps clients achieve measurable savings by refining inputs for the locations that drive loss estimates, as illustrated in our case study above.
- Market placement strategy: With competitive property conditions through the first half of 2026, USI leverages market access to secure improved terms, limits, and pricing for well‑managed risks.
Accurate property valuations are a strategic lever for cost control and risk reduction. Take time now to review your valuations and policy language so you’re prepared before the next renewal cycle.
Email pcinquiries@usi.com to start the conversation today with your USI consultant to protect your assets and your bottom line.
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