Understanding the Statement of Values (SOV) Schedule

The Statement of Values (SOV) Schedule is a critical document used in insurance underwriting. It provides a detailed breakdown of an insured's property values, helping insurers assess risk exposure and determine appropriate coverage. Below is a comprehensive explanation of each field in the SOV.

1. Address

• The physical location of the insured property.
• This must be the complete street address, including suite or unit numbers if applicable.

2. City

• The city where the property is located.
• Helps insurers assess risks related to crime rates, weather conditions, and local fire protection services.

3. State

• The state or territory where the property is located.
• Determines compliance with state-specific insurance regulations and requirements.

4. Zip Code

• The postal code for the property location.
• Useful for geographical risk assessments, including wind, hail, flood, and earthquake zones.

5. Construction Type Categories & Disclaimers

Frame (Class 1)

• Definition: Buildings where the exterior walls, floors, and roof are primarily made of wood or other combustible materials.
• Risk Profile: High fire risk and lower structural integrity during disasters.
• Insurance Impact: Typically higher premiums due to increased fire susceptibility.

⚠️ Important Disclaimer:
💡 If you are unsure whether your building qualifies as "Frame," consult a professional.
Selecting this category incorrectly may result in higher premiums or incorrect coverage classifications.

Joisted Masonry (Class 2)

• Definition: Exterior walls made of masonry (brick, concrete block, or stone), but the interior framing is wood or another combustible material.
• Risk Profile: Improved fire resistance compared to Frame, but still combustible interior.
• Insurance Impact: More favorable rates than Frame, but still moderate fire exposure.

⚠️ Important Disclaimer:
💡 If your building contains combustible interior framing, but you are unsure of the exterior material, consult an expert.
A misclassification could impact fire coverage provisions in your policy.

Non-Combustible (Class 3)

• Definition: Buildings where the exterior, floors, roof, and interior are made of non-combustible materials such as metal or concrete.
• Risk Profile: Minimal fire risk but susceptible to heat damage and collapse.
• Insurance Impact: Lower premiums for fire coverage but may have limitations on structural damage coverage due to heat exposure.

⚠️ Important Disclaimer:
💡 If your building has a metal structure but contains combustible interior components, consult your insurer before selecting this category.
Choosing this classification incorrectly may reduce fire coverage or create coverage gaps in case of a loss.

Masonry Non-Combustible (Class 4)

• Definition: Buildings with masonry (brick, concrete block, or reinforced concrete) exterior walls and non-combustible interior components (such as steel or concrete).
• Risk Profile: Higher resistance to fire and structural collapse.
• Insurance Impact: Typically qualifies for more favorable fire and property insurance rates.

⚠️ Important Disclaimer:
💡 If you are unsure whether your building’s interior components are non-combustible, do not assume it qualifies for this classification.
Incorrect classification may lead to denied claims or policy changes upon inspection.

Fire-Resistive (Class 5)

• Definition: Buildings where structural components (walls, floors, roof, etc.) are designed to withstand fire for at least two hours using reinforced concrete, protected steel, or advanced fire-resistant materials.
• Risk Profile: Highly resistant to fire and structural damage.
• Insurance Impact: Lowest fire risk classification, leading to lower premiums and potentially better coverage terms.

⚠️ Important Disclaimer:
💡 If you are unsure whether your building meets the two-hour fire-resistance rating, consult an engineer or fire protection expert.
Misrepresentation could result in loss of fire protection coverage or increased policy costs if discovered during a claim investigation.

6. Year Built

• The year of original construction of the building.
• Older buildings may have outdated materials or require structural improvements.

7. Square Footage

• The total floor area of the building (measured in square feet).
• Used for determining property value, risk exposure, and policy pricing.

8. Number of Stories

• The number of floors in the building.
• Taller buildings may have different fire safety requirements and impact risk assessment.

9. Building Value ($)

• The estimated replacement cost of the building, not the market value.
• This reflects how much it would cost to rebuild the structure in case of a total loss.

10. Business Personal Property Value ($)

• The total value of movable assets inside the building, such as:
  • Furniture
  • Inventory
  • Machinery
  • Computers
• Helps determine contents coverage limits in the insurance policy.

11. Equipment

• Specifies any specialized equipment housed in the building.
• Examples:
  • Manufacturing machinery
  • Commercial kitchen appliances
  • IT infrastructure
• Some policies require specific endorsements for high-value equipment.

12. Primary Use

• The type of business or operations conducted at the location.
• Examples:
  • Retail – Storefront selling products to customers.
  • Office – Administrative and professional services.
  • Manufacturing – Production of goods.
  • Warehouse – Storage of goods and materials.
  • Restaurant – Food service operations.
• Different occupancies have unique risk profiles for fire, liability, and business interruption.

13. Fire Suppression System

• Indicates whether the building has fire suppression measures in place.
• Common types:
  • Sprinkler Systems – Automatically activated by heat to suppress fires.
  • Dry Chemical or CO₂ Systems – Used in kitchens and server rooms.
  • Foam Systems – Typically found in industrial environments.

🔥 Important Disclaimer:

💡 If you are unsure whether a fire suppression system exists or is functional, mark "No."
Failure to disclose the absence or inoperability of a fire suppression system may result in a coverage exclusion. If the insurance carrier finds out during a claim investigation that no active fire suppression system was in place, coverage for fire-related damages may be denied.

14. Fire Alarms & Detectors

• Indicates whether the building has fire detection systems.
• Types:
  • Smoke Detectors – Detect smoke and trigger alarms.
  • Heat Detectors – Activate based on temperature changes.
  • Manual Pull Stations – Allow occupants to manually trigger alarms.
  • Monitored Fire Alarm Systems – Connected to a central station for emergency response.

🔥 Important Disclaimer:

💡 If you are unsure whether fire alarms or detectors are installed and active, mark "No."
Insurance carriers may exclude coverage for fire damage if fire alarms were expected but found to be missing or inoperable during a claim.

15. Security System

• Details any security measures in place to prevent theft, vandalism, or unauthorized access.
• Common components:
  • Burglar Alarms – Alerts triggered by unauthorized entry.
  • Surveillance Cameras (CCTV) – Monitors activity on-site.
  • Access Control Systems – Restricts entry to authorized personnel.
  • Security Guards – Physical presence for protection.

⚠️ Important Disclaimer:

💡 If you are unsure whether a security system is installed and active, mark "No."
If a claim is filed for theft or vandalism and the insurer finds that a security system was required but did not exist or was non-functional, the claim may be denied due to misrepresentation.

Final Notes

This Statement of Values (SOV) Schedule provides insurance carriers with the necessary data to evaluate risk exposure, determine appropriate coverage, and price policies effectively. Keeping this information accurate and up to date ensures that your coverage is aligned with your business needs.

🔹 When in doubt, disclose accurately. Insurance carriers may apply policy exclusions if they later find that risk-reducing measures were misrepresented or non-functional.
🔹 If you plan to install or repair these systems, notify your insurance provider to avoid coverage gaps.