A common question asked by a number of clients is why an accurate valuation is necessary for the equipment. Well, the simple answer to this is; it is considered preferable to be proactive as opposed to being reactive in regards to providing accurate insurance replacement costs to the insurers.
It is required that the insurer has the correct replacement as a new machinery valuation at the current values and not the depreciated ones. An honest mistake made by the majority of the clients over here is that they underestimate the costs to rebuild the asset, as the construction costs have raised considerably in the current years. But, it goes without saying that having the assets uninsured in the event of the claim can further lead you to huge financial implications to the cash flow of the company.
Well, there's again a common misconception of some clients related to the Insurance Valuation. According to them, this is not important and considers it to be just an extra financial burden on top of their existing insurance premium. However, there have been many cases where the clients have actually saved money as a result of obtaining a professional valuation. So, it definitely is important and should not be ignored. Here's why:
An insurance loss is something that no company would want to face. There are many businesses who even fail to recover from insurance losses which can further lead to insolvency if the business cash flow cannot sustain the unexpected shortfall.
Now, when the loss adjuster arrives on behalf of the insurance company, you will need to provide them with evidence that states the sum you are insured for. And, in case you are unable to do so, the loss adjuster will then appoint professional valuers to undertake a thorough valuation of your machinery.
It is at this point that the discrepancy between the insured value and true cost of the replacement begins. So, before you end up with these things, it is best carrying out the insurance valuation as otherwise, you may end up with the underinsurance!
If you are looking forward to a professional who can help you with insurance and machinery valuation, MitchellMunn Valuations has to be your pick. We are a leading independent corporate valuation and advisory practice firm having an experienced and knowledgeable team of plant valuers. We have the expertise of valuing all types of fixed assets including plant and Machinery Valuations, equipment valuations, infrastructure valuations and building valuations.
We offer professional and certified valuation expertise to every project. So, mitigate your valuation and business risk and further reduce your time and costs with the assistance of our professional valuers. For more information, feel free to visit our website or simply give us a call.
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