A Model to Evaluate the Rebuilding Costs of Dwellings

Freddy Corlier, Jean-François Ingenbleek and Jean Lemaire

ASTIN Bulletin, 1986, vol. 16, issue 1, 45-62

Abstract: Under-insurance is one of the scourges of homeowner insurance: when it is established after a claim that the rebuilding cost of a dwelling has been underestimated by the policyholder, the proportional rule applies in the sense that the indemnity is reduced in proportion of the under-insurance. To avoid this dramatic problem, prejudicial to all parties concerned, a Belgian company has in 1983 marketed a model to evaluate rebuilding costs: if the policyholder fills in correctly a two-page form, the company forgoes the application of the proportional rule. The construction of this model is explained; then, it is shown how a statistical study sponsored by the Professional Union of Insurance Companies allowed the model to improve.

Date: 1986
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