Insurance Valuations

Businesses must be mindful of the potentially damaging impact out-of-date insurance valuations or undervalued assets can have when it comes to making a claim.

The task of maintaining accurate valuations is often a job that gets put off for another day, but with unpredictable inflation, rising construction costs and shifting property and equipment values, it’s not something you should ignore. It’s often the case that day never comes and businesses are left with significant losses when their claim payouts are out of sync with true values. 

Why are insurance valuations important?

Given the current landscape, you must have up-to-date insurance valuations in place for your commercial properties and critical business assets. Your assets should be valued every three to five years, as although insurers can index-link the sum insured, the construction and replacement costs can vary more widely.  

At Eddisons, our expert valuers are approved by the Royal Institution of Chartered Surveyors (RICS). That gives you the peace of mind that your insurer has accurate, up-to-date and robust valuation reports that will stand up to scrutiny in the event of a claim. 

Do I need an insurance valuation?

Accurate and up-to-date insurance valuations can help to ensure a quick and straightforward negotiation process with loss adjusters to speed up the settlement of a claim. They can also help to avoid valuation averages being applied to a claim and are often required as part of the due diligence process when renewing a policy. 

Insurance valuations are highly recommended where:

• Your current valuations are several years out of date
• Your assets and machinery are old
• You rely on foreign machinery
• The business has undertaken significant restructuring, investment or downsizing 

What is underinsurance?

Underinsurance, which occurs when something is insured for less than its replacement value, has become a big problem for businesses in recent years. 

According to research by a global risk management firm, over 40% of commercial properties in the UK are currently underinsured. The average shortfall of underinsured properties was an average of 43% against the rebuild value covered by their insurance – and where there’s a gap, businesses are typically left to pay the difference themselves.

If you are underinsured when you come to make a claim, there are two approaches insurers typically take:

• They may choose to void the policy and refund all the premiums you’ve paid rather than pay out for the claim. 
• Alternatively, you may receive a reduced claims payment, where the insurer uses an ‘average clause’ to reduce your claim in proportion to the underinsurance. For example, if you insure a build for 70% of the correct value, only 70% of the claim will be paid.

The last thing most businesses want is to have a difficult conversation about how a claim payout might not meet their expectations due to underinsurance, particularly when it involves critical business buildings and assets. 

How can we help? 

Knowing that you have accurate insurance valuations in place provides peace of mind and could potentially save you huge sums when it comes to making a claim. It also doesn’t necessarily mean your premiums will increase.  

At Eddisons, we have a team of property, plant and machinery valuers located across the country who can meet all your insurance valuation needs in an efficient and cost-effective way. 

Valuation methods

We provide insurance assessments using the following three methods:

• Reinstatement

This is the cost to repair, reconstruct or renew assets to a condition equal to but not better than when new.

• Indemnity

This is the sum assured for items equivalent to the cost of replacing the items with identical or substantially similar equipment in a condition comparable to the existing asset.

• Market Value

This is the recoverable value where assets are surplus or no longer used.

Our experts can advise you on the most suitable valuation method to fit your requirements.

For further information about our valuation service, please complete the contact form above or below and a member of our insurance valuations team will get back to you immediately.