What is property valuation?

Property valuation is a process that determines the economic value of a property, whether it be personal, commercial, or industrial. A property insurance program is based on these values, ensuring that all buildings and assets are covered in case of a loss.

What happens if a property is not valued correctly?

Property that is valued correctly is the cornerstone of a successful property valuation program, therefore if the property has an inaccurate value the owner may not be covered fully (or will be over-covered) in case of a loss. Inaccurate insurable values affect carriers, as well. Catastrophe models are increasingly being utilized by insurers and re-insurers, and these models will be ineffective if incorrect values are attached. By relying on accurate insured values, a trusted relationship is created for both parties.

What is considered in terms of a property's value?

When valuing buildings, square footage, occupancy, tenanted space, old structures, and registered historical landmark statuses are taken into factor. For personal property, used equipment, special production equipment, installation challenges, tooling, property of others, and inventory are considered.

What is not included in a building's value?

Land, debris removal, demolition cost, improvements (including yards, roadways, parking lots, exterior lighting, etc.), and increased cost due to ordinance or law are not included in a property’s value.

What are some key mistakes when determining proper values for property?

Three common mistakes include: Not using proper cost indices: Keeping values current and reflecting inflationary cost indices and market trends are also paramount to a successful value for your real estate. Determine the value of the original acquisition cost and factor in inflationary trends in cost. Relying on depreciated values: Many times, depreciated values of property are taken from financial statements, but this is not a correct determination of replacement cost. What should be considered instead, is replacement cost as defined by your insurance company. For building replacement costs, companies can consult a professional contractor, or construction staff, use a building estimation tool, or a replacement cost appraisal. Outdated asset records: While using capital asset records is a good place to begin, decision makers must also be aware of how completed goods are valued at selling price and/or cost. Decision makers must also know how this value is determined and ensure that the coverage matches the reported value.

What are the keys to a comprehensive property valuation program?

Property insurance values are a critical part of all successful risk management programs. The benefits of a successful, well-managed insurance valuation program include: Assurance of proper risk transfer terms and costs for exposure Accurate loss estimates & risk modeling Up-to-date Nat Cat accumulation which includes Wind, equipment qualification (EQ) and Flood Informed retention/reinsurance analysis Effective estimates of risk improvement recommendations

Are on-site visits a requirement for determining correct property values?

They are not always necessary if information on asset records, past appraisals, and building construction cost data can be gathered. This being said, seeing the property in-person is the best way to determine a property’s correct value.

How can TÜV SÜD GRC help me with my property valuation needs?

TÜV SÜD GRC provides a complete range of valuation services for your commercial and industrial needs. These offerings include: Valuation profiles “Desktop” valuation surveys On-site field appraisal reports Grouped asset valuation summary Detailed asset reports Consulting services

Insurance Asset Valuation

DON’T RISK UNDERINSURANCE

Property and equipment are often undervalued and underinsured. In the event of a loss, underinsurance can cost companies dearly in the form of drastically reduced claims.

Valuation based on market value can be inaccurate, especially in times of rapid inflation. A robust insurance asset valuation considers replacement costs, rebuilding costs, demolition, fees, and much more. With accurate values placed on your assets, you will settle claims faster and reduce risk exposure.

Establishing proper insurance asset valuation is integral to finding the right insurance program and rates. Unfortunately, there is no simple equation to establish these values. Accurate insurance asset valuation comes from a variety of factors including, building cost appraisals, company asset records, occupancy, historical features, tenanted space, personal property, and more.

On-Demand Webinar: Property Valuation in Year of Inflation and Hard Markets

Trust TÜV SÜD Global Risk Consultants for your insurance asset valuation

Our Insurance Asset Valuation Programs Include:

Assurance of proper risk transfer terms and costs for exposure
More accurate loss estimates and risk modeling
Up-to-date Nat Cat accumulation including wind, earthquake, and flood
Informed retention/reinsurance analysis
Better estimates of risk improvement recommendations

Our valuation service team has conducted insurance appraisals for Fortune 500 companies globally for over 30 years. The team has conducted appraisals in various occupancies from heavy industry to real estate, institutional, and healthcare.

TÜV SÜD GRC’s services are in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the quality control standard for real and personal property valuation analysis and reports in the United States and its territories.

Customer testimonial

“Working with the TÜV SÜD GRC team has helped us reduce our risk profile markedly. For a property valuation project, the entire GRC team was incredible to work with, particularly Justin Chen. I asked for a very tight deadline that might have even been a bit unreasonable. Justin and his team dug in, went to work, and came through in fine style. I am very appreciative of the efforts and accuracy of the property valuation group. Personally, I am very fortunate to have partnered with a great group of individuals at GRC for the past 10 plus years.” - Frank Francone, Director Risk Management at Brookfield Properties

FAQs about Insurance Asset valuation

What is property valuation?

Property valuation is a process that determines the economic value of a property, whether it be personal, commercial, or industrial. A property insurance program is based on these values, ensuring that all buildings and assets are covered in case of a loss.
What happens if a property is not valued correctly?
Property that is valued correctly is the cornerstone of a successful property valuation program, therefore if the property has an inaccurate value the owner may not be covered fully (or will be over-covered) in case of a loss.

Inaccurate insurable values affect carriers, as well. Catastrophe models are increasingly being utilized by insurers and re-insurers, and these models will be ineffective if incorrect values are attached. By relying on accurate insured values, a trusted relationship is created for both parties.
What is considered in terms of a property's value?

When valuing buildings, square footage, occupancy, tenanted space, old structures, and registered historical landmark statuses are taken into factor.

For personal property, used equipment, special production equipment, installation challenges, tooling, property of others, and inventory are considered.
What is not included in a building's value?

Land, debris removal, demolition cost, improvements (including yards, roadways, parking lots, exterior lighting, etc.), and increased cost due to ordinance or law are not included in a property’s value.
What are some key mistakes when determining proper values for property?

Three common mistakes include:

Not using proper cost indices: Keeping values current and reflecting inflationary cost indices and market trends are also paramount to a successful value for your real estate. Determine the value of the original acquisition cost and factor in inflationary trends in cost.

Relying on depreciated values: Many times, depreciated values of property are taken from financial statements, but this is not a correct determination of replacement cost. What should be considered instead, is replacement cost as defined by your insurance company. For building replacement costs, companies can consult a professional contractor, or construction staff, use a building estimation tool, or a replacement cost appraisal.

Outdated asset records: While using capital asset records is a good place to begin, decision makers must also be aware of how completed goods are valued at selling price and/or cost. Decision makers must also know how this value is determined and ensure that the coverage matches the reported value.
What are the keys to a comprehensive property valuation program?
Property insurance values are a critical part of all successful risk management programs. The benefits of a successful, well-managed insurance valuation program include:
- Assurance of proper risk transfer terms and costs for exposure
- Accurate loss estimates & risk modeling
- Up-to-date Nat Cat accumulation which includes Wind, equipment qualification (EQ) and Flood
- Informed retention/reinsurance analysis
- Effective estimates of risk improvement recommendations
Are on-site visits a requirement for determining correct property values?

They are not always necessary if information on asset records, past appraisals, and building construction cost data can be gathered. This being said, seeing the property in-person is the best way to determine a property’s correct value.
How can TÜV SÜD GRC help me with my property valuation needs?
TÜV SÜD GRC provides a complete range of valuation services for your commercial and industrial needs. These offerings include:
- Valuation profiles
- “Desktop” valuation surveys
- On-site field appraisal reports
- Grouped asset valuation summary
- Detailed asset reports
- Consulting services