Our obligation to our customers is to ensure they have suitable policies that are fit for purpose, which is why our insurance valuations are essential. These valuations play an important role in determining the appropriate level of cover for your properties and/or valuable assets which in turn ensures you get fair and accurate compensation in the event of a loss.
We’ve pulled together a number of key reasons why an insurance valuation is so important for the protection and peace of mind of our customers.
Avoiding underinsurance
Underinsurance is a significant risk that arises when the value of an asset is underestimated, resulting in insufficient coverage. In this case, if a policyholder’s house was to burn down, the specified sum insured wouldn’t be sufficient to cover the costs of rebuilding, which has the potential to place significant financial hardship on the policyholder. It could be that at the time the policy was first started the sum insured was sufficient, but with the cost of building increasing and no review of the sum insured, the policyholder becomes underinsured.
Adequate coverage
An insurance valuation is essential for determining the amount of coverage you need for your properties and other assets. Whether you’re insuring your home, commercial property, business assets or a vehicle, an accurate valuation gives you peace of mind knowing you’ll be adequately compensated in case of loss or damage to your property and assets.
Business continuity
If you run a business, regular insurance valuations are critical for risk management and your continuity planning. Accurate valuations of your assets, including equipment, buildings and inventory, will help determine the right level of cover needed, and ensure the business can recover from unforeseen events.
Lending & finance
If you’re looking to take out a loan it’s likely your bank or lender will want to know what insurance cover you have in place. Lenders need assurance that the assets have adequate insurance coverage, especially if those assets are security against the loan. An up-to-date insurance valuation will give your lender confidence in the asset’s value, and make it more likely you’ll get the lending and finance you need.
Claim settlements
In the unfortunate event of a loss, insurance valuations are valuable because they serve as a basis for claim settlements. When a claim is filed, insurance companies assess the value of damage or loss to determine the appropriate compensation. Having accurate valuations gives the policyholder confidence that they’ll be compensated fairly, and will also take out unnecessary stress during the settlement process.
Changes to your policy cover
Failure to provide regular insurance valuation (usually applied as every 2nd year) may see your insurer change policy coverage terms and conditions. In such cases action can include cover reverting to indemnity, the inability to obtain business interruption/loss of rents, higher excesses, applying average clauses and/or not offering cover at all.
Fire Emergency Levy compliance
All policy holders who insure property in New Zealand against the risk of fire are liable to pay a Fire Service Levy. Accurate valuations help demonstrate your levies are fair and reflective of the risk involved, correctly calculated and paid in line with your statutory obligations.
Replacement Valuation
Because most lenders require owners to insure for full replacement value, it’s likely you’ll also need a replacement valuation so that your policies will allow your insured items to be fully replaced. A replacement insurance valuation is an assessment conducted to determine the estimated cost of rebuilding or replacing a property in the event of a total loss due to fire, natural disaster, or other covered perils.
One of the common misunderstandings with replacement valuations is that your insurance valuation is not a market valuation of your insured item. The amount your house is insured for following a replacement valuation is not at all an indication of what you might get for it in the current market. These valuations also don’t include land value, but will usually make allowance for demolition and removal of debris, related professional fees and even some inflationary allowances.
Over the years we have seen our clients insure certain property (mainly commercial property) in a range of different ways. We recommend replacement value cover to our clients, but that is not always possible given certain circumstances and location for clients and their property. However, it is still a valuable conversation to have with us to ensure you’re as protected as possible and so we can advise on alternative methods of cover that might be used for you and your property cover.
If it’s been a while since you’ve had your property and assets reviewed, there’s a chance you’re at risk of any of the dangers outlined above. Our team is ready to help you review your policies to ensure you’re adequately covered, and give you valuable peace of mind.
