Say your client has a fire and suffers a significant loss. They know their building is adequately insured for $15,000,000 but what about the estimated $10,000,000 of plant, equipment, and contents within the building?
Is it insured? Is it insured adequately? And does the client have a current asset register?
While the rebuild period can be extremely distressing and inconvenient at least the client can rent another building. If the plant and equipment are lost, there is no such luxury. So often, we come across plant, equipment, and contents valuations having never been carried out or updated for an extended period.
Many businesses consider it appropriate to have their buildings insured, whilst not placing the same importance on their plant, equipment, and contents. All businesses no matter their size require current asset registers and insurance valuations to support any potential underinsurance claim. It does not matter how new or old the assets may be at the time of loss, they will all need to be replaced.
As well as potential underinsurance, is the client aware of plant, equipment, and contents valuation issues that will significantly impact the situation at the time of loss, such as:
Lead time to purchase/install these assets
Freight and installation costs
Changes in technology
Cost and availability of new spare parts
No asset register for reviewing
The fluctuation of the Australian dollar
Does the replacement for these assets come from Europe, China, or manufactured locally?
In addition to replacing the plant, equipment, and contents at the time of loss, consideration also has to be given to all the services to those assets including electricity, gas, water, and air which without you don't have an operational business. It's also common for a lot of plant and equipment to have become discontinued and obsolete and owners or staff responsible for insurance have not considered how the equipment may be replaced in the event of an incident.
Are your client's plant, equipment, and contents adequately insured? Don't find out the hard way.
Throughout Australia, Andrew Nock Valuers value buildings, plant, equipment, contents, and mobile plant. Contact us any time to arrange pre-proposal inspections or to discuss any valuation issues you may have.