When Is A Valuation Not A Valuation? Understanding The World of Insurance Valuations Dave Clare BSc (Hons), MCIOB, C.Build.E, Cert CII Divisional Operations Manager – Surveying Services
When Is A Valuation Not A Valuation?
Understanding The World of Insurance Valuations
Dave Clare BSc (Hons), MCIOB, C.Build.E, Cert CII
Divisional Operations Manager – Surveying Services
Underinsurance – Facts & Figures
87% of
buildings valued
in 2015 were
underinsured
£8m? Premium lost
9 years of surveys and no
improvement
39%
average extent of
underinsurance
£374,000 average amount
What effect does this have on a Claim?
Underinsurance impact
Sum insured £11.805M
VAR £14M X loss £2.78M = £2.34M
This cost the
insured
£440,000
Current Sum Insured £510,000
Actual Value at Risk following a fire £830,000
Underinsured by £320,000 (39%)
This cost the
insured
£320,000
Do your clients say this...?
“Isn't market value
the same as
reinstatement
value?”
“I wouldn't
replace the
equipment if it
was damaged”
“I’ll recover
quickly”
“It wont
happen to
me" “A lower sum
insured saves
me premium”
...therein lies the problem!
“My bank
valued it”
Types of Valuations Out There....
Market Valuation
Mortgage/Bank Valuation
Tax Valuation
Probate Valuation
Online Valuation
Matrimonial Valuation
Expert Witness Valuation
Retrospective Valuation
AND
Insurance Valuation / Reinstatement Valuation / Reinstement
Cost Assessment (RCA)
Market Value v Insurance Valuation
Location Market Value Reinstatement Value
Nottingham £730,000 £620,000
London £1.2m £670,000
Scotland £510,000 £590,000
Who wins in this scenario?
Current Sum Insured £2,000,000
Actual Value at Risk following an insurance valuation £4,500,000
Underinsured by approximately £2,500,000 (125%)
Things to Consider –
Buildings
Building regulations
Asbestos removal
Disability Discrimination Act
Listed Status
Architectural detail
Parking
Out buildings
Labour availability
Water treatment
Surveyor fees
Shape of building
Site location
Material costs/ availability
Building height and basement
Demolition
Electricity substation
Landlord’s fixtures and fittings
Listed Buildings – Special Features
Eco Friendly Features
Outbuildings
An external inspection is not enough...
Expect the unexpected!
Underwriting Features
If you’ve not been on TV, you’re not coming in...”
Tenants Improvements / Contents
The Insurance Act 2015
CUSTOMER KNOWLEDGE
FAIR PRESENTATION IN A NUTSHELL
What MUST be actively disclosed NOT required to be disclosed
Knowledge of senior
management
Knowledge of the
insurance team,
including brokers
Information
reasonably revealed
by a reasonable
search
Information held by
the insurer and
accessible to the
underwriter relevant
to the risk
What an insurer
writing this type of
risk would
reasonably be
expected to know
Common knowledge
A fair presentation of the risk
requires clear and accessible
disclosure, without material
misrepresentation, of:
Every material circumstance which
the insured knows/ought to know:
Or, failing that,
Sufficient information to put a
prudent insurer on notice that it
needs to make further enquiries to
reveal those material
circumstances.
Top 10 Things to Remember
1. Market value Vs Reinstatement value
2. Site Restriction
3. Internal Features
4. Material/Labour Supply
5. Special Features/ Interests
6. Site Contamination
7. Extent of the Risk
8. Modern Technologies
9. Statutory Regulations
10. The Insurance Act – Don't Guess
Where To Go For Help...
Google Warning!
BCIS
Insurer
QuestGates
BIBA Valuation Facility Provides
Building Valuations
Machinery/Plant and Contents Valuations
Business Interruption surveys
Passion. Partnership. Progress. QuestGates.
Any
uestions?
T: 0121 794 3150
M: 07739 879 245
W: www.questgates.co.uk
T: 01204 869 844
M: 07734 708 430
W: www.questgates.co.uk
Passion. Partnership. Progress. QuestGates.