Existing buildings · Defined
Insurable replacement value (IRV)
An estimate of the cost to replace the property improvements considered in a stated insurance scope. It is distinct from market value, land value, and outstanding loan balance.
Why it matters
The estimate must identify included buildings, valuation date, cost basis, and exclusions. Demolition, debris removal, code upgrades, equipment, and business interruption may be addressed differently by the assignment and insurance policy. Confirm the intended use.
In practice
A project example
A property’s purchase price includes factors beyond the cost of replacing its physical improvements, so it is not a substitute for a properly scoped replacement estimate.
General educational guidance from KOW Building Consultants. Examples are illustrative, not project records. The applicable contract, standard, program, and jurisdiction control the requirements for a specific assignment.