Why Insurance Valuations Matter to Your Business

How much would it cost to reinstate your business in the event of a loss?

It is both surprising and alarming how many business owners cannot answer this question with confidence.

Have you considered the indemnity period you will require, the effect Brexit and the fall of the pound will have on importing your replacement plant and machinery, the changes in your stock level since you last renewed your business insurance policy, the last time you had your business professionally valued etc. etc.?

The Aviva SME Pulse survey 2015 found that 1 in 5 SMEs were not confident they had the correct insurance cover. Given the risk of underinsurance, this is a pretty shocking statistic. Should anything have happened to the businesses in question, they would have been left to bridge the gap between the insurance cover and the actual replacement costs.

To put this into context, Marriott & Co. recently found a major printing facility to be underinsured by 80%. Had a major loss occurred they would have been faced with finding 80% of the replacement costs from their own resources, at a cost of several million pounds.

If that isn’t a shocking enough statistic for you, a recent Aviva survey of 383 commercial property clients found that 177 (that’s 46%) had underinsured their business by an average of £486,000, a reserve that many businesses just do not have.

It is no surprise that the Financial Conduct Authority is concerned over the ‘alarming degree of under-insurance.’

On the other side of the coin, what if you are paying over the odds for your business insurance cover? Can you really afford to be paying more than you need?

Getting it right is important, and that is where the role of professional valuers comes into play.

BIBA (the British Insurance Broker’s Association) advise businesses to use professional valuation services regularly to make sure that sums insured are correctly assessed. The risk of not paying the correct insurance cover will be higher if you have not received a professional valuation within the last three years.

Independent and RICS Registered Chartered Valuation Surveyors, such as Marriott & Co., provide expert, and, more importantly, impartial insurance valuations of your business assets.  They will be aware of the influencing factors on replacement costs (such as exchange rates and inflation) that may otherwise go overlooked. By employing their services, you can be sure that your insurance cover is accurate and protect your business from the risk of financial liability.

Hopefully disaster never strikes, but if it does, isn’t it better to be prepared?

 

By Frances Smithson