Why you need a professional valuer for insurance purposes?

Protecting your business with the right insurance can pay off and provide peace of mind knowing that if something goes wrong, it’ll quickly be made right with little effect on day-to-day business. However, proper insurances for your business and its assets are the result of accurate valuations. The last thing you want is to have incorrect sums insured and run the risk of underinsurance and potential unnecessary over-insurance costs.

Unfortunately, most Australian businesses have only 50 to 75% of the correct replacement value for property, plant and equipment. Furthermore, beyond the associated risks of under-insurance, directors are ultimately responsible for declaring insured values and can be penalised for misrepresentation in the event of a claim.

What happens when you under-insure

When it comes to insurance claims, businesses typically want a quick claim process. However, if it transpires that there is no solid basis for the declared insurance values, you can bet that there will be delays. Insurers can investigate which can in turn lead to a protracted claims process and delayed settlements which can take months or years.

If property and business have been underinsured, whether intentionally or not, the insurer may also decide that the underinsurance is deliberate and refuse to accept the claim at all. Although this is an extreme case, it can happen and is a reason you should always seek the advice of an independent valuer like B&A Valuers.

On the other hand, if the insurer does pay, despite the underinsurance you’ll find that the payout will fall short and not cover the full loss and costs involved.

Importance of using an independent valuer

When the unexpected happens and your business assets have been affected, your insurance cover exists to make good your losses and allow your business to get up and running again. Most businesses already have property insurance to cover the property, plant and equipment held through an Industrial Special Risks (ISR) policy. By using an independent valuer, you can get a professional valuation to both simplify and streamline your claims process.

In addition to this, most businesses need to understand that without a professional valuation, it’s more than likely that their property, plant and equipment has been underinsured. Unfortunately, insurance cover can not only be based on the advice of an insurance broker or a trusted employee responsible for your insurance. Business owners need the peace of mind that their business is covered and hasn’t been exposed to significant risk.

Why not conduct a self-assessment?

The reason is simple: self-assessment typically leads to underinsurance. At the end of the day, insurance exists to restore your business to the position it was before it experienced its loss. Therefore, it should reestablish the business on an identical basis without financial penalty.

Without the help of a formal valuation, it’s very likely that your self assessment is based on incorrect advice and assumptions which can then lead to two problems:

The sums insured are incorrect

These incorrectly insured sums are reviewed and often fail to take into account the real rise in cost of reinstatement

The costs of reinstatement are typically ignored but can include professional fees, debris removal, site improvements, currency fluctuations and changes to building codes. Add on top of that the lead times for DA approval, planning, the rebuild period and policy life and it pays to have an independent valuer look at your assets for insurance purposes.

Why you need to get it right from the beginning

It’s very easy to make sure your property, plant and equipment have been property insured. You simply need to have your business assessed by a qualified property, plant and equipment valuer with years of experience conducting valuations for insurance purposes.

As we’ve outlined above, a proper valuation reduces risk for you and your business and ensures both a fast claims process and the ability to reset your financial situation.

One piece of advice we have is to ensure you have an up-to-date asset register so that you can quickly respond to a loss without a dramatic impact on your business. If you don’t have one yet, getting an expert valuation done will help build your asset register and the internal processes needed to keep it updated.

Summary

Using a qualified property, plant and machinery valuer can help make sure your business is properly insured. The reasons for this include:

Avoiding underinsurance and its consequences in the event of a claim

Avoiding overinsurance and excessive premiums

Adding more ammunition to negotiations when it comes to renewals

Faster claims processes without the insurer disputing the insured sums

Compliance for risk mitigation and decreased director exposure to false claims

Annual desktop review of sum insured

So it’s absolutely crucial to have your business and its assets valued correctly with the help of an independent valuer. B&A Valuers, are a leading independent valuations and asset advisory firm for property, plant and equipment with almost 40 years experience supporting small and medium enterprises, large corporates, multinationals and the government.