The Importance Of Correct Insurance Valuations

You may have taken an insurance policy for your property a long time back. In the meantime, you may have added or subtracted space from it. You may have added a property at another location. The value of the property may have increased due to increased business activities in the area or regular renovations. All of it means the value of your property is no longer the same as it was when you took the insurance policy. It is time to review the value of your property in your insurance policy. Accurate insurance valuations help receive the right compensation in case of accidents and damages.

A property has an inbuilt value. The land and the building on it have the real estate value while the machinery, equipment and other items have property value. A business has many other things that are not covered under the real estate property. These items include the office furniture, computers, appliances and other items used in the day to day business activities. Insurers take into account the value of all these things when calculating insurance valuations.

There are two ways business properties are valued by the insurance companies. The first is the replacement cost which is the total amount needed to replace a damaged property like a building, equipment or other item. Another form of valuation is done based on the cash value of the property at the time of taking the insurance coverage. It is the replacement cost but it does not include the depreciation caused by aging and wearing. You may prefer valuing your property based on the market value, tax or replacement value. It is better to get an insurance policy based on the replacement value because the market value of a property can go up or down over time. At the same time, insuring your property for the replacement cost can be expensive compared to insuring it for the actual cash value.

It all depends on the type of risks you want to cover, the type of business you are operating, your financial standing, expected future incomes, and the value of the items that require insurance coverage. It takes some effort and time for proper insurance valuations of all business properties. You must keep all purchase receipts of furniture, computers, equipment and other business properties. It ensures proper insurance valuations by the insurance provider. Prepare a record of all your business properties properly. The record should also include the lists of artworks, antiques and other expensive items purchased for the business purpose or owned in the company name. Hire a professional property value estimator for estimating the values of all your business properties.