Insurance valuation is at the heart of John Foord’s services.
We help insurers, reinsurers, owners, brokers and loss adjusters define accurate values at risk and reduce the potential for conflict between stakeholders.
Our team provides insurance appraisal services for commercial property, plant and equipment globally.
John Foord is proficient at providing replacement cost assessments from single buildings and small manufacturing facilities, to the world’s largest power and petrochemical complexes.
Expertise in Reinstatement Cost Assessments and Insurance Valuations
The John Foord team has comprehensive knowledge of:
- Property damage insurance policy terms,
- What insurers will consider in the event of a loss/claim,
- What insurers and adjusters will consider during replacement or reinstatement,
- The separate approaches needed for appraisals for different industries,
- How to define insurable elements at a location,
- How property damage cover integrates with other insurance coverage, and
- Why historic costs and accounting values may differ from current values at risk.
Why use John Foord’s insurance valuation services
Our insurance valuation approach and the independence of our service is designed to ensure that stakeholders have the accurate information they need to make informed decisions on appropriate insurance coverage and policy terms.
We have no conflicts of interest, so you are assured that in the event of a claim our assessment will be reviewed impartially.
Your valuation will be handled by specialists with knowledge of your industry. Our team have the expertise to identify changes in costs driven by technology, supply chains, construction techniques and building regulations. This ensures that you are insured at the correct levels and that the replacement cost assessments can be completed with minimal disruption to your facilities.
We conduct regular client satisfaction surveys and our clients highlight our speed of response, professionalism, efficiency, communication, transparency in valuation approach, and industry experience as being key reasons why they continue to work with us. This is perhaps best demonstrated by the fact that most of our clients have worked with us multiple times over many years.
For more details on how our insurance valuation services can help in risk management, placing of risk or pricing of risk, please get in contact with us:
Specific Valuation Approaches
Reinstatement Cost Assessments/
Replacement Cost as New
This is usually defined as the estimated cost of the rebuilding of buildings or, for commercial assets other than buildings, the replacement by similar assets, to a condition equal to, but not better or more extensive than, its condition when new.
Typically, we produce values on a ‘Day One’ Basis. This means that the value excludes any allowance for escalation due to inflation or other factors during the insurance policy period. It also excludes any escalation during the period required during design, planning, tendering and reconstruction.
If helpful, we can provide commentary on cost escalation estimates. We can also reflect other inclusions in insurance policies such as allowances for demolition and debris removal. Our forecasts are backed by detailed and sophisticated trend analysis from our research team using decades of underlying supporting data as well as access to hundreds of different third-party cost data sources.
Our reinstatement cost assessments include for costs relating to procurement, freight charges, mobilisation, demobilisation, insurance costs, design, detailed engineering, installation, commissioning, contractor’s profit and start-up costs.
We also reflect owners’ costs in our rebuild cost assessment – this would relate mainly to project management liaison, project administration, owners’ expenses, internal engineering fees, consultant costs, etc.
The principle of indemnity insurance cover is to put the insured back in the same financial situation they were prior to the loss, no better or worse off.
Indemnity Value are usually defined as the estimated cost of replacing the commercial assets with equivalent assets from the second-hand marketplace of the same age, condition, capacity, and output and then making allowance for the costs for reinstallation and commissioning the assets. For buildings, this excludes any land, and will be the added value that the asset gives to the market value of the land.
Where indemnity is being used as the basis for property damage coverage, it is essential that the values at risk are assessed correctly, particularly taking into consideration the opportunity to replace assets in the second-hand market plus the need to allow for the full costs of reinstallation and commissioning.
Actual Cash Values
Actual cash value is typically defined as the estimated reinstatement cost, as at the date of the valuation, of the actual or similar assets minus depreciation, deducting to account for the age, condition and remaining useful life of the asset.
Inclusions and Exclusions
One area that causes the most confusion, and often the most errors, in declared values at risk is inclusions and exclusions.
A company’s fixed asset register may include a large number of items that do not need to be reflected in reinstatement costs, e.g. road registered motor vehicles, financing costs, software, licence fees and initial feasibility/environmental studies. Equally, asset registers may not include a number of insurable elements that may need to be reflected in values as risk, e.g. rented assets.
How assets are correctly allocated between buildings and plant is also critical, ensuring that there is clarity in the event of a loss.