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

Site Location

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

E: alistair.steward@questgates.co.uk

W: www.questgates.co.uk

T: 01204 869 844

M: 07734 708 430

E: dave.clare@questgates.co.uk

W: www.questgates.co.uk

Passion. Partnership. Progress. QuestGates.