Statement Of Values
What Does Statement Of Values Mean?
A Statement of Values (SOV) is a detailed report submitted by an insured to an insurer. It lists the insured properties, specifying their types (e.g., buildings, equipment, or inventory), the value of each property, and the method used to determine those values (e.g., Actual Cash Value, Replacement Cost, or Valued Basis following an appraisal). For policies covering multiple locations, a separate SOV report is typically required for each location.
Completing an SOV is a crucial step in the commercial insurance process, as insurers use it to calculate premiums. Additionally, it provides businesses with valuable insights into their property, aiding in tax reporting, strategic planning, risk management, and other operational activities. Brokers also rely on SOVs to ensure that insurance coverage limits are adequate.
In some cases, Statements of Values are also required for homeowners’ insurance policies, particularly for high-value items such as handbags, jewelry, watches, fine art, and other valuables being added to the policy.
Insuranceopedia Explains Statement Of Values
Despite its seemingly tedious nature, a Statement of Values (SOV) report is a vital tool for underwriters, brokers, and policyholders.
- For underwriters, the SOV helps determine premiums by detailing the total property value and breaking it down into categories such as tenant improvements, inventory, equipment, and computers, each of which is rated differently.
- For brokers, it ensures the selected insurance limits are sufficient to adequately protect the client.
- For policyholders, it provides valuable insight into their assets, enabling better planning and informed business decisions. Additionally, an SOV is often required when requesting special terms, such as a Stated Amount of Coinsurance clause.
To prevent underinsurance, the SOV must be accurate and comprehensive. It should include not only the total value for each property at every location but also all insurable items within each property, such as machinery and equipment.
To ensure accuracy, it is advisable to seek assistance from a finance professional, like a property insurance broker, when drafting the SOV. Many insurers offer templates and spreadsheets to streamline the process. An SOV must be verified for accuracy and signed before being accepted by the insurer.
Once finalized, the total value listed in the report is referred to as the Total Insurable Value (TIV).
