Insurance Policy Auditing and Adequacy Testing

Key Takeaways

• Construction cost inflation of 30-50% since 2019 means many properties are significantly underinsured—update replacement cost estimates annually.
• Conduct policy audits annually and after any significant property change (renovation, acquisition, major loss).
• Common audit findings include underinsured replacement cost, missing endorsements, and outdated lender mortgagee clauses.
• The cost of annual policy auditing is negligible compared to the cost of discovering a coverage gap during a major claim.