A valuation of potential property loss is a risk management strategy that determines the potential financial costs that could result from property loss. It depends on such factors as the initial purchase price, its current market value, depreciation, tax appraised value, and replacement cost. The latter often offers the best indication of the degree of potential loss to be insured.
Anyone who owns property can benefit from a valuation of potential property loss to help establish the coverage they should seek in a property insurance policy. Without an appropriate "pre-loss" valuation, coverage may be inadequate from the onset and thereby still leave the policyholder exposed to the risks they insured themselves against. Because all properties face such risks as theft, fire, weather damage, and so on, accurate valuations ensure adequate coverage in case of a substantial loss.
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