Insurance Valuations
PP&E Valuations provide professional property, plant and equipment valuation services for insurance purposes.
The benefits of obtaining an independent insurance valuation include:
It is widely reported that a high percentage of businesses are under-insured and many do not survive a major loss event, such as a fire.
Are you 100% confident that you are declaring the correct sums insured?
Typically insurance renewal / application forms require the insured to declare the sums insured on property, plant and equipment however, few will have the technical knowledge to accurately calculate this figure.
The benefits of obtaining an independent insurance valuation include:
- Declaration of the correct sums insured;
- Establishment of a reliable register of assets including photographs;
- Smoother, quicker claims process; and
- Avoid conflict in the event of a claim.
It is widely reported that a high percentage of businesses are under-insured and many do not survive a major loss event, such as a fire.
Are you 100% confident that you are declaring the correct sums insured?
Typically insurance renewal / application forms require the insured to declare the sums insured on property, plant and equipment however, few will have the technical knowledge to accurately calculate this figure.
Bases of Insurance Valuation
The two most common bases of value under insurance policies are Reinstatement with New Value / Reinstatement Cost and Indemnity Value.
Reinstatement with New Value / Reinstatement Cost
Where property is lost or destroyed, in the case of a building, the rebuilding thereof, or in the case of property other than a building, the replacement thereof by similar property in either case in a condition equal to, but not better or more extensive than its condition when new.
Where property is damaged: the repair of the damage and restoration of the damaged portion of the property to a condition substantially the same as, but not better or more extensive than its condition when new.
Indemnity Value
The cost necessary to replace, repair and/ or rebuild the asset insured to a condition and extent substantially the same as, but not better or more extensive than, its condition and extent at the time that the damage or loss occurred, taking into consideration the age, condition and remaining useful life of the asset.
Reinstatement with New Value / Reinstatement Cost
Where property is lost or destroyed, in the case of a building, the rebuilding thereof, or in the case of property other than a building, the replacement thereof by similar property in either case in a condition equal to, but not better or more extensive than its condition when new.
Where property is damaged: the repair of the damage and restoration of the damaged portion of the property to a condition substantially the same as, but not better or more extensive than its condition when new.
Indemnity Value
The cost necessary to replace, repair and/ or rebuild the asset insured to a condition and extent substantially the same as, but not better or more extensive than, its condition and extent at the time that the damage or loss occurred, taking into consideration the age, condition and remaining useful life of the asset.
Declared Sums Insured
The declared sums insured needs to not only include the cost to rebuild or replace the asset but also other costs that are incurred such as demolition and debris removal, and fees for planning, architects, surveyors, consulting engineers, legal advisers, etc.
It is also necessary to take into account any extra cost of reinstatement to comply with the requirements of building regulations in place at the time the loss occurs.
You are wasting money if you don't declare the correct sums insured.
If you are over-insured, you are wasting money by paying excess premiums.
If you are under-insured, your premiums are effectively wasted because they won't be providing the necessary protection against loss.
It is also necessary to take into account any extra cost of reinstatement to comply with the requirements of building regulations in place at the time the loss occurs.
You are wasting money if you don't declare the correct sums insured.
If you are over-insured, you are wasting money by paying excess premiums.
If you are under-insured, your premiums are effectively wasted because they won't be providing the necessary protection against loss.
Limit of Liability
In relation to insurance valuations for property assets, we report a Limit of Liability.
The Limit of Liability comprises the reinstatement cost, plus an allowance for inflation over the rebuild and insurance periods and the cost for demolition and debris removal.
The Limit of Liability comprises the reinstatement cost, plus an allowance for inflation over the rebuild and insurance periods and the cost for demolition and debris removal.
Co-insurance
Many insurance policies have a co-insurance or averaging clause which means that if you are under-insured you are self-insuring for the difference in value, and therefore bear a rateable proportion of any loss.
For example, if you are insured for $1M but the sums insured should be $2M, in the event of a total loss you would need to fund the $1M shortfall. In the event of a partial loss of say 50% ($1M) you would only be able to claim insurance of $500,000, meaning you would need to fund the other $500,000 shortfall. This is the cause of many businesses not being able to recover from a significant insurance loss event.
For example, if you are insured for $1M but the sums insured should be $2M, in the event of a total loss you would need to fund the $1M shortfall. In the event of a partial loss of say 50% ($1M) you would only be able to claim insurance of $500,000, meaning you would need to fund the other $500,000 shortfall. This is the cause of many businesses not being able to recover from a significant insurance loss event.
Demarcation of assets
As valuers of both property and plant and equipment assets we avoid problems with demarcation of assets, ensuring all assets are recorded and valued, and allowing you to deal with a single firm for all assets.
This also ensures that there is a consistent approach, methodology and report format across all locations and assets.
This also ensures that there is a consistent approach, methodology and report format across all locations and assets.
Independence
We are completely independent.
We only act for you, our client, and never both the insured and insurer.
We only act for you, our client, and never both the insured and insurer.