If your business is not insured, you might’ve to face severe consequences, both financial as well as existential. Now, by law, every business needs to get insured. It doesn’t matter if you are running a small or large business, you have to get insured. Each year your assets are revalued and based on that, your insurance valuation is decided.
If there is a slight error in revaluating your assets, it can affect your business’s insurance coverage. Thus, the valuation of insurance is critical for any business insurance and it should be conducted by experienced evaluators. Now, the following are the points explaining the importance of insurance valuation.
Avoid paying too much for insurance
We think that knowing about your business’s worth is easy. Just add all the stock market value, total assets including valuation of PPE (Property, Plant and Equipment), and business bank account balance, and the result is your business valuation. But, if your business is not valued properly, it can cost you more in terms of insurance premium. The best way to deal with such a problem is to hire the services of a reputable insurance valuation company to ensure the correct numbers. By knowing the true valuation of your business, you can simply avoid paying too much for insurance, it happens when you have overvalued your business.It Simplifies the claims process
By hiring the services of an insurance valuation company, you get the actual valuation of your assets and liabilities. This annually revised valuation keeps your business value up to date. This is beneficial at the time of applying for insurance claims. As you have the actual picture of your business status and have taken insurance accordingly, it will be helpful for your business to rebuild. And such valuations solidify your business’s insurance claims in a smooth manner. Your claims are processed smoothly and you don’t have to conduct any lengthy evaluations process while applying for claims.Minimises risk for your business
Knowing the very fact that your business is fully covered is satisfying. If your business is properly assessed by a professional insurance valuer, you get a clear advantage of covering everything. As mentioned in the above point, the claim process becomes simple. It helps to get the entire insurance claim as you had an updated asset valuation included in the insurance. This assurance minimises the risk for your business and you can focus on your business growth. Also, you save a lot of time and energy by hiring a professional for insurance valuation.Avoid risk of underinsurance
Underinsurance is a state wherein during an insurance claim, your settlement or payout may not cover the total replacement value of the assets insured. This commonly happened due to insufficient sum insured for the nominated assets. It can occur due to negligence in calculating the revaluation of assets. This occurs due to many reasons such as people forgetting their business insurance, some preferring lower premium prices and ignoring any increase in the cost of the building. Underinsurance of your business can make you vulnerable to all uncertain events. It can result in huge losses as you have to cover the difference between the cost of damages and the insurance cover. One can avoid such losses with the help of proper evaluation done by an insurance valuer.
It is always better to go for professional help when it comes to the insurance valuation of your business. They can find the actual value of your business property by assessing the fixed asset register reconciliation as well as the valuation of variable assets. The final decision is up to you, whether you want to hire a professional insurance valuer or not.
You can also read: Significance of Plant and Machinery Valuation in the Changing Times
