A thorny question for your insurance broker. How do you determine the sums insured we need to guarantee full replacement? Every good broker has received that question time after time. And his good answer is “you pick the sum to be insured”. How helpful is that? They, of course, don’t want to be on the hook when a property is underinsured and the loss exceeds the sums insured nor do they want to over-insure as a competitor will beat them in terms of premiums with lesser sums insured. Most carriers use a service such as Marshall and Swift that tracks the cost of building materials by region and plots the cost of rebuilding in the event of a major loss such as fire. The broker if he’s good will Google the property if he cannot walk it, will calculate the square footage at risk add for certain additional features such as a clubhouse, use a Marshall and Swift valuation and derive a suggested sum insured. Board of directors should be careful to not select a quote in which the premium is lower while the data shows that the sum insured is also lower. Being fully insured is most important when a high rise is involved as the one building may indeed become a total loss as a result of an insured peril while an association with say 15 buildings, spread out, may reasonably expect not to loose all buildings even in a conflagration. If several quotes all are using approximately the same sums insured you can feel fairly comfortable about the insured value. If they are far apart get each to explain how they arrived at the sums insured. One useful comment. Insurance companies will no linger guarantee full replacement value by many will offer some increase in the sums insured over the so called insurance limit as a buffer against underinsurance. Pay careful attention to that clause and its workings.