Valuations Conference Westin Dragonara 29 th May 2012. Chris Cuschieri ACII Assistant Senior Manager Commercial Underwriting and Reinsurance Tel: 23 43 01 62. www.elmoinsurance.com. Property Valuations - An Insurance Perspective. www.elmoinsurance.com. Insurance Basic Principles.
Chris Cuschieri ACII
Assistant Senior Manager
Commercial Underwriting and Reinsurance
Tel: 23 43 01 62
Function of Insurance – The function of insurance is to provide a mechanism whereby an insured pays out a small premium (known definite cost) in return for a cover should one or more of an agreed list of perils or hazards operate and as a consequence the Insured suffers loss or damage to his property or incurs a liability.
Indemnity – Indemnity deals with restoring the Insured to the same financial position enjoyed before the occurrence of a loss.
Claims Settlement – Insurers retain the right to settle the loss by:
Normally, the most practical and preferred option is to effect payment to the Insured or directly to the supplier providing the repair or replacement services.
Insured Values – In order to ensure that the Insured obtain best benefit from his insurance and the above principles are applied, values insured need to be set at the correct realistic value. Setting wrong values on an insurance policy is one of the most common disappointing factors experienced by Insureds.
Valuations – Insurance is somewhat different from other economic operators where valuations are concerned. Insurance deals with the actual cost to replace the Insured Property at the time of the loss. Therefore, the market value of property is an important figure for the buyer, the bank financing a purchase, the Inland Revenue Department; however it is not of interest to the Insurance Company.
Valuations (other considerations) – The insured value of property should reflect the following main items:
Cost of foundations and superstructure.
Cost of finishes – all those items that are permanently fixed to the superstructure including apertures and bathrooms.
Other costs incurred in connection with the execution of the above (e.g. MEPA fees, architects and other professional fees, debris removal costs following an accident).
Types of Insurance where valuations are required:
Commercial Premises Material Damage
(e.g. Shops, factories, large industrial concerns)
Contract Works Insurance