Statement of values: what underwriters need from your SOV
Your statement of values sets your price. Size the limit to your worst loss, remove the average penalty and prove each field. Worked examples included.
Your SOV sets your price, so use it to negotiate
Your statement of values (SOV) is the schedule of insured properties, their values and the valuation basis behind each value. The underwriter adds it up into the total insured value (TIV), which is everything you own plus your insured earnings, then prices from it and runs catastrophe models on it. A claims adjuster can revisit it after a loss.1 It is evidence, and a buyer who treats it that way has more to negotiate with than one who treats it as an admin form.
The market default is to fill in the columns the broker asks for and send the spreadsheet. That serves the placement workflow, because it is fast. It leaves the underwriter's problem untouched: every field you leave blank or let go stale is filled with a conservative assumption and priced. An unverified construction class becomes the more combustible one, an undocumented sprinkler system becomes none, and an unexplained BI figure becomes a maximum. That is the evidence problem the commercial insurance market describes: underwriters fill gaps in a submission with their worst assumption, then price it. The extra charge for what cannot be checked is called a loading.
The alternative is to attach the proof behind each critical field and present the company as a well-run risk. Whether that lowers the price depends on the market cycle and your claims record, and no method guarantees it. A field the underwriter can check gives them nothing to assume; a field they cannot check can only be assumed. The first document an underwriter sees also sets their view of the risk, so send nothing to the market until the evidence for the critical fields is complete. A half-ready SOV sent early tends to set a first price that later evidence does not easily undo.
The gap is common even among professional teams. In ScyAI's research with corporate risk and insurance professionals, published in the whitepaper Commercial Insurance Has an Evidence Problem (September 2026), 47% were unsure whether they had captured all insurable assets and 66% named chasing people for data as a top challenge.
Before your next renewal, score your SOV the way an underwriter would: for each site, could the value, its valuation basis and the construction, occupancy, protection and exposure (COPE) detail each be verified from a document you hold? Every field that fails is a place where the market prices guesswork.
Your limit should follow your worst loss, not your total value
The SOV adds up to the TIV. The policy limit is something else: the most the insurer pays for one event. A company with 10 sites spread across a country cannot lose all 10 in one fire, so a limit set equal to, or close to, the TIV buys cover for a loss that cannot physically happen.
That is the market default. It serves the insurer, because premium grows with the limit, and it can serve a broker paid commission as a share of premium. This is an incentive built into the structure, not bad faith, and it is the one a buyer has to correct for.
The alternative is to commission an independent engineer to estimate the worst single loss for each fire area, the largest realistic loss from one event, known as the probable maximum loss (PML). The estimate adds the building damage, the lost profit while it is rebuilt and the extra costs a policy pays, such as debris removal, professional fees and rebuild inflation. Buy the limit to that figure with a margin, and give the engineer's study to the underwriter as evidence.
Illustrative example: a group has 10 sites and a total value of 500M. The worst fire area would cost 80M in damage and 60M in lost profit, so 140M. Adding 15% for debris, fees and inflation gives 161M, which is 32% of total value. A limit of about 175M covers the worst real event. The 325M above it would cover a loss that physical separation makes impossible.
The default is right in two cases: a single site, and sites close enough that one event reaches all of them. Natural hazards such as earthquake or flood can also hit several sites at once, so the engineer should model events, not just buildings.
From real losses: debris, fees, authority requirements and inflation during a two-year rebuild are what push a loss past a limit that looked adequate. Size them into the limit, not on top of it.
Agreed values and blanket limits remove the average penalty
The average clause, called coinsurance in the US, cuts a claim in proportion to how far the declared value falls short of the true value. Gen Re's worked example: a building insured for EUR 500,000 with an actual value of EUR 1 million suffers EUR 200,000 of fire damage, and the benefit is reduced by 50%, to EUR 100,000.2 The market default is to accept the clause as a fact of life and try to keep every value exactly right every year. That serves the insurer, because every value error anywhere in the portfolio becomes a cut to the payment.
But the clause is policy wording, and wording is negotiated. Gen Re noted in 2023 that, in recent market conditions, many manuscript wordings deleted a previously existing underinsurance clause and waived the check of the agreed sum insured against the actual value, while insurers were trying to re-establish such clauses.2 In the US version, the coinsurance penalty usually applies only if values fall below a set share of true value, commonly 80, 90 or 100%.
The alternative has three moves. First, have values independently appraised and agreed with the insurer in advance, so the clause is deleted. Second, buy a blanket limit across all sites, so an undervalued site is offset by an overvalued one. Third, index values every year to a named reconstruction cost index. Index-linking adjusts the sum insured by an agreed index, but Gen Re notes that manual resets remain necessary where some equipment costs rise faster than the index.2
Check what comes with the blanket limit. Gen Re describes the margin clause, which caps each location at a percentage above its scheduled value, typically 110% or 125%, and so turns a blanket limit back into per-location limits.2 Negotiate that percentage.
Use one valuation basis only: new replacement value (NRV), the cost to rebuild or replace as new, independently appraised, indexed every year and agreed with the insurer in advance. Actual cash value takes off depreciation, so an old building pays far less than it costs to rebuild. It is the basis to avoid, not an option to tick.
Illustrative example: Site A is declared at 40M but would cost 50M to rebuild. Site B is declared at 60M but would cost 50M. A fire causes 20M of damage at Site A. With site-by-site limits and the average clause, the insurer pays 40/50 of the loss, 16M, and the company absorbs 4M. With one blanket limit over both sites and no average clause, the declared total (100M) matches the true total (100M) and the insurer pays the full 20M.
What a stale SOV costs at claim time
The cost of a stale SOV is a proportional cut to the claim payment, applied by a clause that only becomes visible when you need the money. Between renewals the gap opens quietly. Verisk 360Value data show that US commercial reconstruction costs rose 5.5 to 5.7% in 2024, with labour up 5.3% and concrete up 8 to 9.3%. Compounded over a three-year deal, that rate adds roughly 17 to 18%. Because the insurer applies the clause to the claim-time value, not the inception value, a multi-year deal fixed at inception without indexation quietly builds a penalty.
Business interruption follows the revenue chain, not the map
Business interruption (BI) is the profit you lose while a damaged site cannot operate. The market default is to declare last year's gross profit, split it by site and choose a 12, 18 or 24-month indemnity period, the period during which the policy pays lost profit, because that is the usual number. That serves speed of placement: nobody has to map how the business really earns money.
The alternative starts from the revenue chain: which sites, suppliers, customers and utilities each revenue stream depends on. Damage at one site can stop sales made at three others, so a per-site figure misses where the money is really lost. The figure comes from finance, defined as the policy defines gross profit and reconciled to the approved budget.
Derive the indemnity period from the real recovery timeline, not the calendar. Equipment delivery is only one part. The period runs from the loss until the business is back at the output it had before: clearing the site, getting permits and planning approvals back, rebuilding, delivering and installing equipment, sourcing stock and rebuilding customer and supplier relationships. Lockton's April 2026 guidance lists these steps and notes that BI values must rise if a recovery period longer than 12 months is selected.3 Ramp-up alone can add months. Procurement supplies the replacement lead times for critical equipment that feed this timeline.
Set the sum insured on forward gross profit for the policy year plus the whole indemnity period, with a clause allowing for growth. With a 24-month indemnity period that means a 36-month forecast, not 12. Insure named key suppliers and customers individually, rather than through a small blanket allowance.
Illustrative example: a company made 100M of gross profit last year and is growing 8% a year. A fire on the last day of the policy year, with a 24-month recovery, loses the profit of the next two years: about 117M and 126M, so 243M in total. A sum insured based on last year's 100M covers 41% of that.
A court case shows what a weak forecast costs. In Infinity Reliance v Heath Crawford (2023), a retailer with a 24-month indemnity period declared a BI sum insured of £24.9m from a two-year gross profit forecast. The High Court put the correct figure at about £33m, noted that the company had applied an arbitrary 10% growth figure and found the broker's gross profit guidance misleading. Average cut the settlement to £9.25m against an adjusted loss of £12.17m.4
Also check deductibles expressed in days, for example no BI paid for the first 30 days. They remove cover for the short interruptions that happen most often; a deductible in money, or a short waiting period, keeps it.
| Column | What to declare | Basis to document |
|---|---|---|
| PD per site | New replacement value (NRV) | Independent appraisal, valuation date, named reconstruction cost index |
| BI | Forward gross profit by revenue stream | Policy definition of gross profit, approved budget, policy year plus indemnity period |
| Limit | Engineer's worst single loss plus extra costs and margin | Engineer's study attached to the submission |
Check first the cheap assets that can stop everything
The market default is to sort the SOV by value and verify the top sites first, because that is easy to explain and easy to audit. It serves convention rather than the buyer, because what hurts a business most is usually lost profit, not rebuild cost.
Rank assets instead by what their loss would cost the business. Look for single points of failure with no backup and long replacement times: a transformer, a substation, a kiln, a control system, a single supplier.
Illustrative example: a substation worth 2M might rank 200th on the SOV. It feeds a plant earning 120M of gross profit a year and takes 9 months to replace. Losing it costs about 90M of profit, 45 times its own value. That asset deserves more verification, and more spare-parts planning, than the headquarters building.
The value ranking is still right for pricing property damage, because the sites that dominate the TIV and the PML carry the most weight in the underwriter's model. Verify both lists; a lean team starts with the sites on either.
COPE and geocoding: the detail that makes values checkable
COPE stands for construction, occupancy, protection and exposure, the four property risk characteristics an underwriter reviews in every submission. Construction covers materials, age and layout; occupancy covers what happens in the building and which hazardous operations it contains; protection covers sprinklers, alarms and the external fire response; exposure covers natural hazard zones and neighbouring risks. In the US, most excess and surplus (E&S) carriers, which write the risks the standard market declines, require thorough COPE data alongside the SOV and loss history.5
Precise, geocoded locations let catastrophe models price your actual site rather than a postcode average. Two sites with identical values can carry materially different flood, wind or earthquake exposure depending on exact coordinates, elevation and distance to water or fault lines.
Every documented fact removes a loading
A value without context is unverifiable, and unverifiable values get priced defensively. The proof you attach is what makes a number credible.
Illustrative example: "Sprinklers: yes" gives the underwriter nothing to check. "Automatic sprinklers throughout, designed for the stored goods, water supply tested in March 2026, independent engineer's report attached" is a fact they can credit. The first entry is priced as if it might not be true. The second gives the underwriter a reason to price on your evidence.
| Field | Entry that gets priced defensively | Proof that can be credited |
|---|---|---|
| Construction | "Concrete" | Survey report with materials, floors, area, year of build and roof type |
| Protection | "Sprinklers: yes" | Design basis for the stored goods, water supply test date, engineer's report |
| Location | Postcode | Exact coordinates per site and a hazard zone report |
| Critical equipment | Not listed | Replacement lead time from procurement and spare-parts status |
| Values | Last year's figure | Appraisal date and source, named reconstruction cost index |
Each row is a place where an assumption can be replaced by a document.
One template and one value basis across every country
For a multi-country programme, every local schedule must reconcile to the master, and every difference between jurisdictions must be deliberate. Inconsistent SOVs and wordings across sites are a named driver of renewal friction for asset-heavy groups, because the underwriter cannot tell whether a value difference reflects the asset or the spreadsheet.
Run one template and one valuation basis, new replacement value, across all countries. If one subsidiary declares replacement cost and another book value, the master SOV adds up numbers that mean different things. Map local constraints, such as admitted policies, mandatory cessions to local insurers and local taxes, against the master values. Gen Re noted in 2023 that determining sums insured for multinational policies with locations around the world is a distinct challenge.2 Reconcile wordings as well: if a local policy values property on another basis, or keeps an average clause that the master wording has removed, the SOV asserts a cover the policy does not deliver.
Before the renewal, ask each local broker or subsidiary for their current schedule in your master template. The differences that come back are a map of where the programme's data, and possibly its cover, has drifted.
Test the policy against a real loss before signing
The market default is to assume that correct values mean the policy will pay. That serves the insurer, because gaps in the wording only show up at claim time, when the buyer has the least leverage.
Take the worst-loss scenario from the limit section and run it line by line through the draft wording before binding: limits, sub-limits, deductibles, exclusions and the indemnity period. Fix what does not pay, then run the test again on the final signed wording.
Illustrative example: the policy caps debris removal at 5M. Clearing a burned-out plant costs 12M, so 7M is uninsured even though the main limit is large. Another common trap: a fire that starts from an electrical fault can be argued into a smaller machinery breakdown limit. Ask for wording that states that a fire resulting from an electrical fault is paid under the fire limit, and have your broker and coverage counsel confirm how your own wording responds.
A 60-day plan ranked by business impact
A structured renewal method uses a 60-day asset-data exercise covering construction, occupancy, protection, roof, sprinklers, valuation, geocoding, equipment lead times and indexation, and a lean team can run the same sequence itself. Sequence it by business impact: reconcile what exists first, then verify the assets that can stop the business, then reset values and limits.
- Days 1 to 20: collect and reconcile what already exists. Pull policies and endorsements, the expiring SOV, engineering and survey reports, asset lists and claims records into one place, rank assets by what their loss would cost the business and commission the worst-single-loss estimate. Route each gap to the function that owns it: finance for valuations and gross profit, operations for construction and maintenance detail, procurement for lead times. In ScyAI's research, 66% named chasing people for data as a top challenge.
- Days 21 to 40: verify and prove. Confirm construction, protection and geocoding for the sites on both rankings, the highest-value and the business-critical, and attach the document behind each critical field.
- Days 41 to 60: reset and test. Update PD to NRV with a valuation date and a named index, set BI from forward gross profit over the policy year plus the indemnity period, set the limit from the engineer's study, ask for agreed values in the wording and run the draft wording against the worst-loss scenario before binding.
Scale it honestly: a team of one to three people should start with the handful of sites and assets on both rankings rather than the full portfolio. Complete, verified data there beats partially refreshed data across the whole list, and the tail can follow in later quarters.
From an annual spreadsheet to living evidence
The deeper fix is fewer clean-ups. An SOV rebuilt from scattered files every renewal starts each cycle from zero and re-imports last year's gaps. Maintaining an accurate SOV streamlines underwriting and prevents claim disputes,1 which means treating it as a continuously reconciled record rather than an annual spreadsheet.
The diagnostic question to ask now: would your current SOV survive underwriter scrutiny, field by field, and would the policy it supports pay what you expect in a realistic loss? If you cannot answer from evidence, the schedule is running on trust, and trust is priced defensively.
This is the problem the ScyAI Digital Risk Twin is built for. It reads the files the company already has, policies and endorsements, statements of values, engineering reports, asset lists and claims histories, and reconciles assets, physical risk, insurance and financing in one customer-owned model, so each renewal starts from evidence rather than a scramble. Your data stays yours throughout, under the platform's privacy policy and terms. The 60-day clean-up above is the data-heavy part it does faster and more completely, alongside your broker and internal team, who decide what is shared.
The practical first step costs nothing. Put three questions to your broker in writing before the next renewal:
- Which clauses in our draft wording reduce a claim payment if a site value is wrong, and what would it take to delete the average clause or replace it with agreed values?
- What is the worst single loss for each fire area, and does the proposed limit cover it including debris removal, professional fees and rebuild inflation?
- If the worst-loss scenario happened today, which sub-limit or deductible would stop the policy paying in full?
Then bring one policy, one SOV and one question your current process cannot answer. Whether the answer holds is the difference between a schedule the market prices on your evidence and one it prices on its doubt. To score your full renewal package before it goes out, download the PDBI submission checklist: every unchecked item marks a place where the market prices guesswork instead of your risk.
Frequently asked questions
What is a statement of values in insurance?
A statement of values (SOV) is a schedule the insured submits to the insurer listing all insured properties, their values and the valuation basis. The insurer builds the total insured value (TIV) from it and prices from it. Attach proof to the fields that matter, so the underwriter has less to assume.
What should a statement of values include for property insurance?
A breakdown of insured assets (buildings, equipment, inventory), the valuation basis for each and location-level detail. For a PDBI programme add forward-looking BI by revenue stream, construction and protection detail per site, geocoded locations and critical-equipment lead times, each with the document behind it.
Does every location need its own entry on the SOV?
Yes. Insurers typically require values and detail per location, because exposure, construction and protection differ site by site. The entries do not set your limit, though: buy that to the worst single loss, not to the sum of the entries.
How high should the property limit be?
As high as your worst realistic single loss, not your total insured value. Have an independent engineer estimate it per fire area, including lost profit and extra costs such as debris removal and fees, add a margin and give the study to the underwriter.
What valuation should property be declared at on an SOV?
New replacement value only: independently appraised, indexed every year to a named reconstruction cost index and agreed with the insurer in advance. Actual cash value takes off depreciation and pays far less than a rebuild costs, so avoid it.
How does an inaccurate SOV affect a claim?
Where the policy contains an average clause (coinsurance in the US), the insurer can reduce the payment in proportion to the shortfall. The clause is policy wording and negotiable: agreed values, a blanket limit or a margin clause can neutralize it. Ask before binding, and have your broker and coverage counsel confirm how your own wording responds.
How often should a statement of values be updated?
At every renewal at minimum, and ideally continuously, because reconstruction costs drift with inflation. Log new sites and changed operations as they happen and index values every year to a named index, so the renewal starts from a current schedule.
How do you keep an SOV consistent across multiple countries?
Use one template and one valuation basis in every country, and map local constraints such as admitted policies and mandatory cessions against the master values. Before renewal, ask each local broker or subsidiary for their schedule in your master template; the differences show where cover has drifted.
Sources
- Insuranceopedia, Statement of Values (SOV)
- Gen Re, Risks of Underinsurance in Property and Possible Regulation (6 November 2023)
- Lockton, Business Interruption Values (23 April 2026)
- Infinity Reliance Ltd v Heath Crawford Ltd [2023] EWHC 3022 (Comm), High Court (Commercial Court)
- Arlington Roe, COPE coverage: the key to stronger commercial property submissions
About the author
Alex Sidorenko
Alex Sidorenko is Head of Risk and Insurance AI at ScyAI, with more than 20 years of experience in corporate risk and insurance. FERMA named him Risk Manager of the Year in 2021.
This article was created with the help of AI.