006 Eight reasons why Net Book Values cannot be used to arrive at replacement costs for property damage insurance
Accurate assessment of replacement costs for a commercial property using asset registers is challenging, and more so in Asia. This creates problems for insurers, owners of assets, lenders, and insurance brokers alike. Many companies use net book values (NBV) of their commercial assets as the basis of replacement costs, and thereby procure insurance for these sums.
In this whitepaper, John Foord explains eight reasons why NBV cannot be used to arrive at replacement costs for property damage insurance.