Insurance valuations

Question

How do you calculate the current required insurance cover for specific items? For example, if a bench, noticeboard or playground equipment was purchased some years ago, how do you decide on current replacement value for insurance purposes without trying to source current like for like prices?

Answer 1

Several answers to this one as each PC is different. Insurance of assets should be covered by a new for old basis for replacement. As most assets in PC's possession are not "written down" for depreciation ( or up for appreciation) but stated as original value then it needs to carry out the exercise of re-valuing at replacement value every year to ensure that the cover all value amount included in the policy by the insurance company "lump sum" basis covers the potential losses. This has of course needs to be calculated based on the likely hood of the maximum you may have to claim within a year. It is highly unlikely that all of the assets might be claimed for at once. Buildings are of course another matter than a park bench. Of course you insurance company or broker would be able to hopefully guide you to the most cost effective way to protect the assets for replacement.

Answer 2

There are different ways of looking at this. You could assess the likelihood of needing to make a claim, for example, a streetlight on a busy road may be struck by a passing vehicle, whereas a metal bench in a park is far less likely to suffer insurable damage. Some policies determine premiums based on your asset values, whereas others have fixed premiums for a range of values, e.g. up to £25k, £25k to 50k etc. Understand the implications on your premium for your own policy and you may wish to inflate or deflate or even remove items entirely.

For items you perceive the hold the greatest likelihood of making a claim, go for full replacement value, as you'll be paying an excess anyway, so seek to gain the maximum benefit from your cover. If your insurer deems the item to be overvalued for a claim, they'll simply pay a lesser amount. There's no penalty for this.