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Rise in Property Values Brings Insurance Cost Considerations

The recent rise in demand and costs for materials and labor has increased property values significantly, which can in turn impact insurance costs. 
The values of SC Municipal Insurance and Risk Financing Fund member properties are a deciding factor in determining the contribution that the SCMIRF member will pay each year for property coverage. The price of materials, labor and construction are some of the factors that determine the replacement cost of property. As the price of lumber and steel increases, so does the cost to build municipal buildings. The value of land is not a factor, and is not measured.  
SCMIRF contracts with HCA Asset Management to provide property appraisals for all members. The appraisal is done to make sure the property contributions and coverage limits of each member are fair and accurate. There is no additional cost for this service and appraisal reports are made available to members. HCA starts the appraisal process in March and concludes it in June.  
On average, properties are appraised every six years. HCA conducts a property valuation on buildings valued at $10,000 or more for members who have property coverage in coastal regions. For members in inland counties, the threshold is $100,000. Outside of the six-year cycle, HCA reviews newly acquired buildings valued at $1 million or more.  
This appraisal process ensures that the properties of each member are properly valued and adequately insured. It also allows SCMIRF to provide accurate replacement cost values. Property contributions are based on 100% of the property’s replacement cost values. Specific limits on the amount of coverage for each scheduled property are based on the figures established by HCA. 
During years when an appraisal does not take place, SCMIRF applies an inflation factor that is provided by HCA. That annual inflation factor is expected to grow by double digits until the end of 2023.  
After appraisals are complete, SCMIRF sends the report to the member. Each appraisal report includes the address of the scheduled property and its new estimated replacement cost value. 
In order for the appraisal process to run smoothly and take a minimal amount of time, HCA will ask that blueprints, copies of contractor pay applications, and details of all the water and wastewater facilities and site plans be readily available.  
For any additional questions about property appraisals, contact Robert Collins, underwriting manager at or 803.933.1279.