What is a significant factor in determining if a property can obtain insurance?

One of the most significant factors in determining whether a property can obtain insurance is the cost to replace or rebuild the structure. Insurers assess the risk associated with insuring a property by evaluating how much it would cost to repair or rebuild it in the event of a loss, such as fire or natural disaster. High replacement costs might indicate a greater risk to the insurance company, which can impact the availability and affordability of coverage.

While other factors like historical value, current market conditions, and neighborhood demographics do play roles in a broader context of risk assessment, the tangible, quantifiable cost of replacement is a primary concern for underwriters. This cost informs them about the potential financial exposure they would face. If a property has a high replacement value relative to its market value or its exposure to hazards, this could lead to difficulties in obtaining insurance or result in higher premiums.