What Does Statement of Values (SOV) Mean?
A statement of values (SOV) is a report that an insured submits to an insurer. This report outlines the property insured, its type (ie. building, equipment, or stock), the value of each piece of property, and the method used to calculate that value (ie. Actual Cash Value, Replacement Cost, or on a Valued Basis following an appraisal). On policies that insure more than one location, you will typically need to complete one SOV report per location.
Completing a Statement of Values report is an important step in the commercial insurance buying process because this is one of the tools the insurer uses to determine your premium.
This is also useful in helping the business get insight into their own property. This information can then be used for tax reporting, strategic planning, risk management, and other activities. The report will also help brokers determine whether the limits of insurance are adequate.
Statements of Values are also sometimes required on some homeowners' insurance policies for high value items like handbags, jewelry, watches, fine art, and other items being endorsed onto the policy.
Insuranceopedia Explains Statement of Values (SOV)
Despite how tedious this task first appears, a Statement of Values report is an important tool for underwriters, brokers, and policy owners.
For underwriters, it helps them determine the premium to charge based on the amount of property as well as the amounts for each category of property (ie. tenant improvements, inventory, equipment, computers, etc.) as they are each rated differently.
For brokers, it helps them determine whether the limits of insurance selected are adequate to protect the client.
For clients, getting some insight into their own inventory can help them make plans and business decisions. When requesting special terms such as a Stated Amount of Coinsurance clause, an SOV is often required by the underwriter.
To avoid underinsurance, the statement of values must be accurate and comprehensive. It must not only provide the amount for each property in every location but it must also list all the insurable items in each property, such as machinery and other equipment.
In order to ensure the accuracy and comprehensiveness of their statement of values, you should get the assistance of a finance professional, such as a property insurance broker, when drafting their SOV.
Many insurance providers also provide helpful spreadsheets and forms to make the process more organized. An SOV report needs to be verified as accurate and signed before the insurer will accept it.
Once a Statement of Values report is completed, the total number is referred to as Total Insurable Value (TIV).