A statement of values is the spreadsheet your insurer uses to price your property: every location, its replacement cost, construction type, and occupancy. Get it wrong and you’re either overpaying or underinsured when a claim hits.
Of all the documents in your insurance file, the statement of values (SOV) is the one that most directly decides both your premium and whether a claim actually makes you whole. It’s also the one owners most often fill out casually. Bad combination.
What it is
The SOV is your declaration of what it would cost to rebuild your property — building values, square footage, construction details, plus business income/rents. Underwriters price your policy from it, and at claim time, the numbers on it get audited against reality.
The mistake: market value ≠ rebuild cost
Owners constantly anchor on the wrong numbers: purchase price, appraised market value, or the loan balance. None of those is rebuild cost. In LA, land is a huge share of market value — but land doesn’t burn. Meanwhile construction costs have run far ahead of what most owners carry in their heads. A building bought years ago at one number may cost dramatically more to rebuild today.
Both directions hurt:
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Overstate values and you’re paying premium on phantom exposure, year after year.
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Understate values and the co-insurance penalty shows up at the worst possible moment.
The worked example (co-insurance, in one paragraph)
Say a building would truly cost $4,000,000 to rebuild, but the SOV says $2,800,000 — 70% of the real number. The policy carries a 90% co-insurance clause. A kitchen fire does $400,000 of damage. The carrier doesn’t just check whether $400,000 is under your limit — it checks whether you insured to the required percentage of true value. You didn’t, so your recovery gets scaled down proportionally: roughly $311,000 in this example, before the deductible. That missing ~$89,000 isn’t bad luck. It’s arithmetic that was sitting in your file for years, waiting.
How to get it right
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Use rebuild cost, from a replacement cost estimator or recent comparable construction — not Zillow, not the loan docs.
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Update it annually. Construction inflation alone drifts your numbers meaningfully every year.
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Match reality: correct square footage, unit count, construction type, updates with dates.
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Don’t forget loss of rents — the building can be accurately valued while the income side is badly underdeclared.
An accurate SOV is also the backbone of a strong submission — underwriters can tell within a minute whether your values are real, and it colors how they read everything else in your file (we covered this in the E&S guide).
Bottom line
The SOV is a five-figure document that most owners treat like a form. Spend an hour on it with someone who knows what LA construction actually costs right now.
