Insurance Valuations

It is now more important than ever that businesses ensure that their property, as well as their plant and machinery are insured at the correct levels. The Insurance Act 2015, and the client’s duty of fair presentation means that businesses now have a duty to make sure that sums insured are correct.

The best way to do this is to have a professional valuation undertaken, by an RICS registered valuation company. Moorcroft Valuation Surveyors are ideally placed to support this requirement.

Contact

For more information on our Insurance Valuation services please contact:

Antony Bailey, Head of Insurance and Asset Valuations
M: 07500 864 181
T: 0333 7000 130
E: antony.bailey@moorcroftpg.com

When is a Valuation Required?

• We recommend this is undertaken whenever you are renewing your insurance with the valuation acting as a 'check' of your sums insured
• If your last valuation was undertaken several years ago
• If you have undertaken significant changes to your property or assets within your business through acquisition or disposal
• Where there is foreign machinery amongst the assets a valuation helps to allow for the fluctuations in exchange rates

Why is a Valuation Required?

When you commission a professional insurance valuation, it provides you with:

• Certainty that you are correctly insured
• A high chance that the average clause will be removed if you make a claim
• The ability to speed up and make it easier to negotiate with a loss adjuster should a claim be made and replacement equipment needed urgently
• A written down plan for the replacement of assets taking into account non-essential or surplus equipment which could be insured under a different basis

Bases of Valuations for Insurance Purposes

There are many ways to undertake Insurance Valuations and it is important that a thorough understanding of a client’s assets is gained before starting the process. This includes understanding long term investment plans, understanding the cycle of machinery replacement and understanding any planned changes in production. All of which can enable a valuation to be done on a basis which could reduce insurance premiums whilst ensuring cover is adequate. Common approaches include the following:

Reinstatement Cost Assessment (RCA) - This is the 'standard' way of undertaking valuations for insurance purposes. The basis allows the assets to be repaired, reconstructed or replaced to a condition equal to but not better than when originally purchased or built.

Indemnity Cost Assessment (ICA) - This method values assets based on the equivalent cost of replacing them with identical, or very similar equipment in a condition which is the same as the existing asset, including costs of delivery, installation and commissioning. This value is established by comparable replacement costs or the depreciated reinstatement value.

Market Value - In a situation where a company has assets that are surplus, or no longer used, this could be a suitable method as it insures based on the market value of the assets should they be destroyed in the event of a claim.

Modern Equivalent - Where there is a number of older machines which have a lower production level than a modern equivalent, this cover can be selected to help reduce premiums. In the event of a claim, the older machines are replaced with a fewer number of modern machines, reducing the cost of replacement whilst ensuring that the same output can be achieved.