Build a luxury condominium tower in Manhattan, and it might be worth $500 million. Put the name “Trump Tower” on it, and it may be worth $800 million because people are willing to pay a premium to live there.
The replacement value — which is the basis of the insurance premium — is going to be closer to the $500 million value because if the building is destroyed in a disaster the insurer isn’t paying to rebuild a brand name, just a building.
Trump is accused of falsely claiming the amount of square footage in his properties, especially his personal suites. Then using those inflated values to secure loans. I'm not sure that's criminal, but it should be pretty much accepted how much square footage a suite has, should it not?
As someone who works in the residential mortgage industry for a living, I’ve found it to be VERY commonplace that an insurer’s replacement cost estimate on a given property is valued lower than the actual market price (especially when you get to properties valued in the upper six digits to the lower seven digits, at least in my experience).
Good points!