Replacement cost and market value are both expressed in dollars, but they describe different things. Treating them as interchangeable can make a property file look more precise while making it less useful.
What replacement-cost context is for
Replacement-cost estimates are intended to provide context for the cost of reconstructing a building under a stated set of assumptions. They may consider building size, construction, occupancy, location, labor, materials, and other characteristics. The estimate depends on the quality of those inputs and the methodology used.
What market value includes
Market value reflects what a buyer may pay for the property. It can include land, location, expected income, financing conditions, scarcity, and other factors that do not represent reconstruction cost.
Why the distinction matters
A building can have a market value below its estimated reconstruction cost, especially where land values or local market conditions are weak. The reverse can also occur. Neither difference proves that a submitted value is correct or incorrect.
A better review workflow
Use estimated replacement cost as a comparison point. When it differs materially from a submitted value, review the building characteristics and assumptions first. Confirm square footage, construction, occupancy, stories, renovations, and other relevant inputs. Then determine what additional information the underwriting or inspection workflow requires.
PerilScore presents valuation context as an input for review. It is not market value, a coverage recommendation, or a substitute for carrier valuation standards.
Keep building value separate from other submitted coverage components in the SOV template. For any estimate, retain its stated basis, assumptions, and source context with the review.