Determining Replacement Costs in Insurance Appraisals

Your job is to provide an estimate for replacement with a comparable item — not an exact duplicate. A customer brings in a new cocktail ring and asks for an insurance appraisal. Should you base your estimate on the amount it would cost you to make another one like it? Ask yourself the following questions before you decide: Is your store’s reproduction cost typical of such costs in the market? The Uniform Standards of Professional Appraisal Practice (USPAP) makes a distinction between the value of an item existing in the market (value estimate) and the cost to reproduce it (cost estimate). USPAP makes clear that any appraisal, whether value estimate or cost estimate, must be based on the typical range of prices in the market. Many erroneously believe that a cost estimate is what it would cost any merchant to produce the item. Is the ring a comme
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