Total Insurable Value (TIV) is the estimated replacement cost value of the association's improvements being insured. Boards should ask the association's insurance agent what replacement cost was assigned to the buildings and how that value was determined.

Undervalued TIV. Establishing the correct TIV is important because the association will be paying the difference in a large loss if the TIV is too low. For example if the cost to replace your buildings is $10 million and you purchase insurance with a TIV of $6 million, the association will likely be required to pay the deductible plus an additional $4 million before the carrier will pay any monies on a total loss from a fire or earthquake.

Appraiser. Accordingly, boards may want to consult an independent appraiser to establish replacement costs for all structures, including any upgrades to the structures.