When it comes to insurance valuation, accuracy is essential. Proper insurance valuations protect your business from unexpected losses and interruptions.
As a business owner, there are plenty of other things to worry about other than insurance. It’s easy to just accept the advice of an in-house accountant or an employee and call it a day. However, if you’re not careful, inaccurate insurance valuations can be detrimental to your business in the event of total or significant loss. For this reason, it’s a good idea to consult with professional insurance valuers to get an accurate assessment.
In this blog, we will talk about the importance of getting formal insurance valuations. We will also discuss the risks that you run by not giving it the attention that it needs.
When you choose to forego formal insurance valuations, you run the risk of miscalculating replacement costs. This often leads to underinsurance, which is the state of not having enough insurance to cover the entire value of your business assets.
This is problematic for two major reasons. First, it can leave you with fewer resources than you need to get your business back into full swing. Oftentimes, it’s the business that has to make up for this shortfall. This process might take months or years to resolve. In that time, your business might suffer even more losses.
Secondly, if your business is underinsured, the insurance provider might consider it as intentional. As a result, they will refuse to pay for any losses. In some cases, they might just dispute your declared insurance values. This is another issue that can take months or even years to fix.
Underinsurance can come due to a mistake on your own part, or rushing through an insurance policy just to make sure you have some form of coverage. If you run a business, you should absolutely look to focus on getting a correct valuation. For full coverage, it is essential that your assets are correctly assessed and evaluated.
Paying more than you need to
On the other hand, you might overvalue what your assets are worth. This could lead to overinsurance, which can cause you to pay unnecessary premiums. Essentially, you are paying more for your assets than you need to. Paying more than what is required means you might not get that same amount back when you file an insurance claim.
Yes, it’s important to make sure that you’ll have enough coverage for your business. However, overestimating costs can also cause significant losses. In fact, there are reports that found some businesses illegally filing for false claims to get said losses back.
For this reason, it’s important to get a formal insurance valuation. Experts will determine your assets’ condition, age and remaining life. They will also take into account levels of depreciation, obsolete and technological developments. Simply put, they will give your business an in-depth and extensive analysis of your assets to come to an accurate sum.
Reduce business interruptions
An insurance valuation might not seem like a huge priority, but it can play a massive role in making sure that your business runs smoothly. By ensuring your business is not liable for excess payments and has the correct valuation for maximum compensation, you avoid a host of business interruptions.
Being underinsured can make the claim process long and drawn out. However, if your declared values are accurate, you will be fast-tracked and there will not be any disputes between your business and the insurer. This also means your business can operate normally during the process.
So, don’t just go for the first valuation or a rough calculation. You want to get the numbers accurate so that you always know things are on the right track. If you want to keep your business strong and secure, it needs to have an accurate valuation of its assets.
When undergoing insurance valuation, you should look to make sure you go with reliable and experienced valuers. This way, you always know you have the correct level of protection. This will allow you to fully focus on other important aspects of your business.