Builders Risk Insights: Finding ACV Without a Calculator

Each month, US Assure Director of Producer Training and Development Mary Stiglic joins us in the studio to address a common question or pain point to help you confidently sell to and service your construction insurance clients.

Read the Video Transcript:

Hi there! 

Welcome back to Tips and Tricks. Today we’ll finally determine how to calculate the Actual Cash Value — or ACV — of an existing structure for a builders risk remodeling policy.

And, to shed light on this exciting topic, I’m throwing it back to the experts! We’re being joined virtually by a special guest who’s taking a quick break to answer our questions — it’s US Assure’s very own underwriter, Dottie Dolittle.

Great to see you, Dottie! Before we get going, tell the folks at home how long you’ve been at US Assure and what you do.

Dottie:
Well, I’ve been with the company 32 years. I started when I was 10, y’know. And through the years I’ve done a little bit of this and a little bit of that, but always to do with builders risk underwriting. And all that builders risk knowledge is stored right up here.

Mary:
Well, let’s jump in. So, for remodeling projects, we already know the Builders Risk Plan insured by Zurich can cover an existing structure along with the renovations— assuming that structure meets Zurich’s appetite. Right?

Dottie:
That’s right. As long as the existing structure fits Zurich’s appetite based on its condition, location, and so forth, Zurich will consider insuring the existing structure.

Mary:
And Zurich covers new materials at replacement cost but the existing structure at Actual Cash Value, correct?

Dottie:
That’s right, Mary. New = replacement cost. Existing = ACV.
Think of ACV like rewinding a VHS tape — the older it gets, the more wear and tear shows. That’s depreciation.
But, Zurich does not provide an ACV calculator. 

Mary:
Which brings us to our topic of discussion … If Zurich does not provide a calculator, what should an agent do to determine actual cash value?

Dottie:
Let’s first define ACV. Actual Cash Value equals replacement cost minus depreciation. You’ll need the ACV when you’re applying for remodeling coverage including the existing structure. It's a simple formula that takes some legwork for accuracy. 

There are a few reliable ways to get a realistic ACV estimate.

First, you could use cost estimator platforms widely used by the insurance industry like Cotality, formerly Marshall & Swift. It’s one of the most recognized sources for estimating ACV when no carrier calculator exists.

Next, you may already have access to assessment tools if you write homeowners policies. You could leverage this access to get the ACV. 

Last, your client might have an ACV valuation report from a certified property appraiser.

Mary:
Thank you, Dottie! These tools aren’t quite as iconic as a mixtape you recorded off the radio but they are pretty great for figuring out ACV. 

Okay, let’s fast forward this cassette and jump to where you actually enter the ACV in the application.

Dottie:
Agents will be required to provide this information when completing our online application for remodeling including existing structure — the field appears once they’ve indicated the type of remodeling policy. 

Mary:
Excellent, and remember, just like big hair, good documentation is always in style.

Make sure you upload any supporting documentation for the policy before submitting the application. The more information you can provide up front, the faster and easier policy issuance will be. 

Dottie:
That’s a great point, Mary!

Mary:
I want to thank my special guest, Dottie, for joining me today. We look forward to having another US Assure employee join us again soon to talk more about these fascinating insurance topics … 80s-style.

‘Til next time.

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