Property · Insurance Term
Insurance to Value (ITV)
Definition
Insurance to value means carrying a property limit close to what it would actually cost to rebuild the building today. When the limit is too low, the owner is underinsured and may receive less than the loss, even on a partial claim, because of coinsurance.
In Plain English
Insurers ask how close your limit is to the true replacement cost of the building. Rebuilding cost is not the same as purchase price or market value. Land is not included, and construction costs can rise quickly after storms or with inflation.
Most property policies include coinsurance, usually 80%, 90% or 100%. If your limit is below that share of the building's value at the time of loss, the payment is reduced in proportion. This can happen even when the loss is far smaller than the limit. Underinsurance is one of the most common surprises at claim time.
A current building valuation from a recognized estimating tool or appraiser helps set the right limit. Your statement of values should reflect those numbers for every building. Some policies offer agreed value coverage, which suspends coinsurance for the policy term once you submit acceptable values.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a building would cost $2,000,000 to rebuild and has an 80% coinsurance clause, so the owner needs at least $1,600,000. The owner carries $1,200,000. A $400,000 loss would be paid at $1,200,000 ÷ $1,600,000, or 75%: $300,000, minus the deductible.
Why It Matters for Texas Property Owners
After large Texas hail or hurricane events, demand for roofers and materials can raise rebuilding costs for a time. Values set several years ago may no longer reflect what a rebuild would cost now.
What to Watch For
- Update building values at least every year or two, and after major improvements.
- Base limits on rebuilding cost, not on purchase price, appraisal for a loan or tax value.
- Check your coinsurance percentage and whether agreed value is available.
- Make sure your statement of values includes every building, including canopies and outbuildings.
Common Questions
My building is insured for what I paid. Isn't that enough?
Not necessarily. Purchase price includes land and reflects the market, while insurance should reflect the cost to rebuild. The two numbers can be far apart in either direction.
Does it hurt to insure for more than the building is worth?
A higher limit generally raises the premium, and policies usually pay only the actual loss. The goal is a limit that matches a realistic rebuilding cost.
Last updated October 14, 2026 · Primesure editorial team · How We Write