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What is property valuation for insurance?
Insurance valuation methods determine values of a building, real estate or machinery to secure insurance coverage. Global Risk Consultants Corp.’s insurance valuation methods review and establish rebuilding and replacement costs so businesses can secure the proper amount of insurance coverage.
How Global Risk Consultants can help you with property valuation for insurance?
Our valuation service team has conducted insurance appraisals globally for over 30 years for Fortune 500 companies in various sectors, including heavy industry, real estate, and healthcare.
Our properties valuations are performed by skilled and certified appraisers, trained in the valuation of commercial property and machinery for insurance purposes. While onsite inspection is generally the preferred method, credible “desktop” valuation of properties are available. They have proven to be an effective valuation service that can be performed remotely when onsite inspection is not feasible.
Global Risk Consultants is well-regarded among insurers worldwide as an independent, unbiased provider of services. Many of them are also our clients. This gives our property valuations a high level of credibility when they are presented to policy underwriters.
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
