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Valuation for Insurance Purposes

Founded in 1896, American Appraisal was established with the aim of providing supportable insurance values across the United States.  In the years since, we have continued to focus our efforts on the insurance market, whilst spreading the reach of our services. With offices in more than 20 countries, American Appraisal’s insurance valuation specialists undertake valuations worldwide, typically inspecting properties in more than 100 countries every year.

Insurance Valuation
Property insurance valuation (covering all risks of physical damage including machinery breakdown), business continuity insurance valuation, estimated maximum losses, worst-case liability exposure, avoiding the costs of over insurance or under insurance

Insurance Valuation Services
Property and business insurance not only represents a major cost to all asset-intensive businesses, but also represents a way of ensuring business continuity in the event of an insured loss. The intent when taking insurance is to obtain adequate cover at a cost that reflects the inherent risks and values at risk. Accordingly, accurately assessing the sums to be insured, via an insurance valuation, is a vital component in obtaining insurance.

We are seeing a number of our large corporate clients start to move away from subjectively rolling forward historic cost records based on market indices to obtaining comprehensive valuations to avoid the adverse effects of over insurance or under insurance of large asset bases.

Over and Under Insurance
The twin perils of over insurance and under insurance are avoided by an accurate assessment of the value at risk.  Over insurance has the result of a business paying excessive premiums. Under insurance, whilst delivering cheaper premiums, can, in the event of a loss, result in insurers failing to pay out sufficient sums to reinstate the assets of a business, or to compensate for business interruption, potentially resulting in the failure of the business.  Accurate, reliable insurance valuation is therefore a key risk management tool for a business.

Insurance Valuation in India
Accordingly, in India there has been a shift in the market in the form of:

  • More onerous valuation requirements for insured assets
  • Increased financial transparency due to increased regulation
  • Improved underwriting discipline dictated by both the direct and reinsurance markets
  • Increased emphasis on a consistent, disciplined approach to underwriting
  • Increased market specialization of insurance carriers
  • Increased focus on regional and national geographic factors
  • Discontinuance of blanket coverage
  • Appraisal requirements for insured properties

As a result of this increased emphasis, companies that rely on historic records subjected to an index of dubious provenance can be directly penalized through increased insurance premiums.

Companies that rely on historic records subjected to an index of dubious provenance can be directly penalized through increased insurance premiums.

Our Work
American Appraisal is the largest full-service independent valuation consulting firm in the world with a global network of offices and staff positioned to serve our clients, both large and small. As a firm we have over 115 years of experience in assisting clients with meeting their domestic and global insurance valuation needs.

Independent valuations in accordance with the definition of replacement values for insurance purposes, i.e., "Replacement-as-New assuming 'Day One Reinstatement,' whereby all assets are replaced instantaneously, in the event of loss, by facilities of like kind and similar design to those destroyed, or damaged."

We can assist our clients by providing:

  • Detailed insurance valuation studies including
    • Property
    • Plant and machinery
    • Business interruption
  • Preparing proof-of-loss data
  • Performing pilot studies, including reviewing sums insured across the entire insured portfolio
  • Rolling programs of insurance valuations
  • Desktop updates of the value of insured assets on an annual basis, following an initial full valuation
  • Loss assessments and assistance with post-loss claims management for insurers, the insured and loss adjusters
  • Provision of reinstatement cost and actual cash value/indemnity value studies
  • Provision of detailed business interruption analysis including the impacts of facility rebuild times, supplier and customer risks
  • Providing support for our clients’ global insurance programs

Please feel free to contact one of our experts to discuss how we might assist you with fixed asset insurance valuations.