Guides
The statement of values: what property underwriters need
How to build a statement of values underwriters trust: the fields, ISO construction classes, replacement cost basis, and how errors in it surface in a claim.
A statement of values (SOV) is a schedule that lists every location and building you want insured, with the replacement cost of each building, its contents, its stock and its income exposure, plus the construction, occupancy and protection details an underwriter uses to rate it. The insurer prices from it, runs catastrophe models on it, and usually relies on it to set a blanket limit. When a loss comes, the values and details you gave on it are the ones the insurer holds you to.
For one small building, an ACORD 140 property section and a short letter may be enough. For a portfolio, a landlord, a retailer with several stores or a manufacturer, the SOV is a spreadsheet, and the quality of that spreadsheet is the first thing that separates a quick quote from a string of underwriter questions.
What the SOV does
- Rating. Rates depend on construction, occupancy, fire protection and exposure to neighboring hazards, so the insurer reads them from the schedule.
- Catastrophe modeling. For wind, quake, flood and wildfire, location accuracy and building details feed the catastrophe model. A mis-geocoded address or a blank roof field can move a property across a hazard line. This matters most for surplus lines and DIC placements, where catastrophe loads drive price.
- Supporting the limit. A blanket limit, agreed value and a margin clause all rest on the values you list. See agreed value, blanket limits and margin clauses.
- Settling a claim. The the coinsurance clause and how underinsurance is penalized compares your limit with the value of the property at the time of loss. If the schedule understated value, the penalty falls on you.
The fields underwriters ask for
The format is not standardized, so a carrier or wholesaler may send its own template. These are the fields that nearly all of them request:
| Group | What to provide |
|---|---|
| Location | Full street address (not a P.O. box or city), a separate line for each building, county, and the legal entity that owns it |
| Construction | ISO construction class, year built, number of stories, total square footage, roof type, roof covering and the year of the last roof replacement |
| Occupancy | What happens in the building today, including every tenant or operation, and any part that is vacant |
| Protection | Sprinkler status (full, partial or none), alarm type (central station, local), the public fire protection class, distance to hydrant and station if known |
| Values | Building replacement cost, business personal property, stock, tenant improvements and betterments, equipment, outdoor property, and business income and extra expense by location |
| Hazards | Flood zone, distance to coast, brush or wildfire exposure, seismic zone, and any known prior losses |
Construction classes
ISO's Commercial Lines Manual sorts buildings into six construction classes, ordered from least to most fire-resistive (IRMI definitions)):
| Code | Class | Description |
|---|---|---|
| 1 | Frame | Exterior walls of wood, brick or stone veneer, or stucco over wood |
| 2 | Joisted masonry | Masonry walls with combustible floors and roof |
| 3 | Noncombustible | Walls, floors and supports of metal, gypsum or other noncombustible material |
| 4 | Masonry noncombustible | Masonry walls with noncombustible floors and roof |
| 5 | Modified fire resistive | Masonry or fire-resistive construction rated at least 1 hour but less than 2 hours |
| 6 | Fire resistive | Masonry or fire-resistive construction rated at least 2 hours |
Choose by what the building is actually made of, not by what it looks like from the street. A brick-walled warehouse with a wood roof deck is joisted masonry; the same walls under a steel deck are masonry noncombustible, which rates better. If you are not sure, ask the architect, the original contractor or a surveyor.
Protection class
Verisk's Public Protection Classification program grades communities from 1 to 10, with Class 1 representing superior property fire protection and Class 10 meaning the area's fire suppression does not meet minimum criteria (Verisk). Split classes such as 5/9 reflect distance to water. Your broker or carrier can look up the class for an address; Verisk supplies the classifications to insurers and agents rather than to the public.
Getting the values right
Building values are replacement cost, not market value. The number is what it would cost to rebuild the building today with materials of like kind and quality. It is not what you paid, the assessed value or the mortgage, and it leaves out what the form does not insure, such as land, below-grade foundations and excavation. The method matters; see insurance to value: setting the right building limit for estimators, appraisals and contractor bids, and replacement cost vs actual cash value for business property for how the valuation basis flows into payment.
Keep the value type consistent across lines. Building, contents, stock and improvements are different coverage items with different valuation rules, so they get different columns. A tenant lists its improvements and betterments separately from its furniture and equipment.
List business income by location. Use a worksheet, not a guess. how to calculate a business income limit walks through it, and a business that depends on one site should give that site its own figure.
Trend the numbers at every renewal. Turner Construction's building cost index rose 3.9% in 2024 and 4.1% in 2025 on an annual-average basis (Turner), and local costs can differ sharply from the national average. A list that was right in 2021 can be well short today. construction cost inflation and your property limits covers the drift.
A hypothetical example
Say a landlord lists three buildings on its SOV for a blanket limit:
| Building | Construction | Year built | Sq. ft. | Sprinklered | Value listed |
|---|---|---|---|---|---|
| A: office | Masonry noncombustible (4) | 2004 | 38,000 | Full | $6,200,000 |
| B: retail strip | Joisted masonry (2) | 1991 | 21,000 | None | $2,300,000 |
| C: warehouse | Noncombustible (3) | 1999 | 44,000 | Partial | $3,400,000 |
| Total | $11,900,000 |
Say the policy is a $11.9 million blanket limit at 90% coinsurance with a $10,000 deductible, and a later rebuilding estimate shows the true total is $14.0 million, not $11.9 million. Building B is $3.5 million, not $2.3 million, and the others have drifted up too. A fire then causes a $1 million loss at Building A. The ISO coinsurance steps in CP 00 10 run on the total under the blanket limit:
| Step | Calculation | Result |
|---|---|---|
| 1. Value times coinsurance percentage | $14.0 million × 90% | $12.6 million required |
| 2. Limit divided by the required amount | $11.9 million ÷ $12.6 million | 0.944 |
| 3. Loss times that ratio | $1,000,000 × 0.944 | $944,444 |
| 4. Subtract the deductible | $944,444 − $10,000 | $934,444 paid |
The coinsurance penalty costs the owner about $55,600 on top of the deductible, on a loss at a building whose own value was listed correctly, because the test is run on the blanket total. Had the true total been $13.1 million, the required amount would have been $11.79 million, the limit would have cleared it, and there would be no penalty. These numbers are invented to show the mechanics; the coinsurance percentage and deductible come from your declarations.
The same list may carry a margin clause, which caps payment at a location, and the SOV is what that cap is calculated from; see the agreed value, blanket limits and margin clauses guide.
Mistakes that cost money
- Valuing at book or market value. A building bought for $3 million in a hot market may cost far more or less to rebuild.
- Leaving out structures. Detached garages, canopies, tanks, rooftop equipment and permanently installed machinery belong in the building value. Signs, fences and landscaping are limited or excluded under the base form, so list them and check how they are insured; see signs, glass and outdoor property: what commercial property covers.
- Combining a campus into one line. Modelers and underwriters need each building with its own construction and sprinkler data.
- Stale secondary details. The roof was replaced in 2019 but the SOV says 1998, or the sprinkler system was shut down. These details drive wind and fire rating.
- Generic occupancy. A restaurant tenant above a retail unit changes the fire hazard of the whole building. List what is there.
- Missing time element. Property and income values need to match across the SOV and the policy.
- Inconsistent documents. The SOV, the application and the engineering or appraisal reports should agree. An insurer relies on the application, and an error can lead to a dispute; see insurance applications: why accuracy matters and what misrepresentation costs.
A process for building one
- Pull last year's schedule and the declarations. Reconcile every location to the policy.
- Get current replacement cost estimates for each building, using a documented method and recording the date and who prepared it.
- Collect construction, roof, sprinkler and alarm information from plans, permits and inspection reports, and verify it on site.
- Add contents, stock, improvements and income values from your books, using the right basis for each.
- Check the format: one building per row, full addresses, no blank fields, consistent units, no placeholder text.
- Have an owner or officer review and sign it, and keep a copy with the date.
- Send it to the broker well before renewal, with explanations for large changes since last year. how to prepare an insurance submission underwriters will read shows where the SOV fits.
Key takeaways
- The SOV is the source of your rate, your model results, your blanket limit and, later, the figure your claim is measured against.
- List one row per building, with a full address and honest construction class, sprinkler status, roof detail and occupancy.
- Building values are replacement cost today, not market value, book value or assessed value, and they must be trended every year.
- Under a blanket limit, an understated value anywhere can reduce what you collect everywhere.
- Date and sign the schedule, keep the support behind each number, and send it early.