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🏠 '''Appraised value''' is the estimated monetary worth of an asset — most commonly real property, a vehicle, fine art, jewelry, or other insurable items — as determined by a qualified appraiser, and it plays a central role in [[Definition:Underwriting | underwriting]], [[Definition:Policy limits | coverage placement]], and [[Definition:Claims | claims]] settlement across the insurance industry. Unlike [[Definition:Market value | market value]], which reflects what a willing buyer might pay in an open transaction, or [[Definition:Actual cash value (ACV) | actual cash value]], which factors in [[Definition:Depreciation | depreciation]], appraised value represents a professional opinion of worth at a specific point in time, based on defined methodologies. Insurers rely on appraised values to set appropriate [[Definition:Sum insured | sums insured]], validate [[Definition:Replacement cost | replacement cost]] estimates, and mitigate the risk of both [[Definition:Underinsurance | underinsurance]] and [[Definition:Over-insurance | over-insurance]].

🔎 In practice, the appraisal process varies depending on the asset class and line of business. For [[Definition:Commercial property insurance | commercial property]] risks, insurers or their appointed [[Definition:Loss adjuster | loss adjusters]] may commission building appraisals that account for construction type, materials, local labor costs, and code-upgrade requirements to arrive at a [[Definition:Replacement cost | replacement cost]] figure. In personal lines, scheduled items on a [[Definition:Homeowners insurance | homeowners]] or [[Definition:Inland marine insurance | inland marine]] policy — such as collectibles, antiques, or high-value jewelry — typically require a certified appraisal before the insurer will extend [[Definition:Agreed value | agreed value]] or [[Definition:Valued policy | valued policy]] coverage. Many [[Definition:Insurance policy | policies]] include an appraisal clause that establishes a dispute resolution mechanism: if the insurer and the insured disagree on the value of a covered loss, each selects an appraiser, and the two appraisers choose an umpire, with a majority decision binding both parties. This mechanism is widely used in the United States and has equivalents in other markets.

💡 Accurate appraised values are foundational to sound [[Definition:Risk management | risk management]] and to the financial health of both the policyholder and the insurer. When assets are undervalued, policyholders face a coverage gap at the moment of loss — potentially compounded by [[Definition:Coinsurance clause | coinsurance]] penalties that reduce claim payments proportionally. Overvaluation, on the other hand, inflates [[Definition:Premium | premiums]] and can raise [[Definition:Moral hazard | moral hazard]] concerns. For insurers, aggregating appraised values across a portfolio feeds directly into [[Definition:Probable maximum loss (PML) | probable maximum loss]] estimates and [[Definition:Catastrophe modeling | catastrophe modeling]] inputs. Regulatory regimes in markets such as Germany and Japan have historically placed particular emphasis on periodic reappraisal requirements for certain insured assets, recognizing that stale valuations erode the reliability of both pricing and reserving.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Actual cash value (ACV)]]
* [[Definition:Replacement cost]]
* [[Definition:Agreed value]]
* [[Definition:Sum insured]]
* [[Definition:Underinsurance]]
* [[Definition:Coinsurance clause]]
{{Div col end}}

Definition:Appraised value - Revision history

PlumBot: Bot: Creating new article from JSON