Insurance appraisals

Two things share the name "appraisal"

Board members hear "appraisal" and often picture one event. There are actually two, and they happen at completely different times for completely different reasons.

The first is a periodic valuation: an independent professional estimates what it would cost to rebuild the property today, and the association uses that number to decide how much coverage to buy. The second is a post-loss procedure written into the policy itself, used only when a claim is already covered but the insurer and the association cannot agree on the size of the loss. Confusing the two leads boards to think a policy's built-in dispute process also tells them how much insurance to carry, which it does not.

How often must the association revalue its coverage

Florida condominium law is specific and unusually firm on this point. The association's coverage must be based on replacement cost, and that figure has to be checked on a schedule, not set once and left alone.

"The replacement cost must be determined at least once every 3 years, at minimum."

Source: Florida Statutes §718.111(11)(a), The Florida Senate

This three-year cycle is confirmed only for Florida condominium associations under Chapter 718. Whether Florida's non-condo HOAs, or associations in any other state, have a similar revaluation duty is not established here; check your own state's statute and your declaration. Other states set their own floor for how much coverage an association must carry in the first place, and those floors themselves differ, so the amount an appraisal is even checking against is not uniform nationwide.

The appraisal clause: what happens after a loss

Separately from any periodic valuation duty, most property policies contain their own appraisal clause. It has nothing to do with setting coverage levels ahead of time. It only activates after a covered loss, when the association and the insurer agree the claim is valid but disagree on how much the damage is worth.

"An appraisal clause is a property insurance provision allowing either the insurer or the insured to demand a binding appraisal of damaged property in the event of a dispute as to its value and establishing the required appraisal procedure."

Source: IRMI Glossary of Insurance and Risk Management Terms, International Risk Management Institute

Each side names a disinterested appraiser, and the two appraisers pick an umpire to break any tie. The result binds both sides on the dollar amount only, not on whether the claim is covered at all.

What your board should actually do

Find out whether your state or your declaration sets a revaluation cycle, and if it does not say, ask your broker or attorney directly rather than assuming a three-year Florida style rule applies. Keep a copy of your most recent replacement cost appraisal with your insurance records; renewal season is the moment brokers ask for it. Separately, read your policy to confirm it has an appraisal clause, so if a dispute over a claim amount ever arises, the board already knows the process exists and does not need to negotiate it from scratch mid-claim.