Putting a price on your assets - what number should you use?

It’s insurance renewal time at AUMA/AMSC, and here’s why property values are huge part of the discussion:

• Knowing the property values helps us assess the overall property insurance needs of our valued general insurance program participants and revise the program offerings where necessary to meet your needs. 
• Your premiums are allocated based on the values your organization submits with your renewal.
• Property values also help you when you have a catastrophic loss and may need to access provincial or federal funding.

So what numbers should you be mindful of with your renewal?

Actual Cash Value – this is the cost of an asset less depreciation. The value is typically assigned if the asset is nearing the end of its lifecycle or utility. If the asset is lost or destroyed, any insurer would typically give you a payment for this lesser amount if you have no plans to replace or to rebuild. This would not include the price of any land.

Replacement Cost – this is the value AUMA/AMSC recommends you insure to. It will make sure that if your asset is lost or destroyed, you will be able get a new one like-for-like. It also helps to pay for bylaw and code updates. In some cases, it helps to fund “building back better” if it could mitigate a similar catastrophic loss. This cost is focused on reconstruction and replacement costs and does not include the price of any land.

Real Estate Value or Market Value – this is the price the market will dictate if you decided to sell an asset. There are many factors that go into this price such as comparable assets on the market, land value and current conditions. Insuring real estate or market value may be overstating an asset’s value on your renewal and you might be paying for too much for insurance.

If your municipality owns residential buildings as part of a purchase or acquisition, you may want to be especially mindful of how you value these assets to make sure you have them on your schedule, but they are not over insured.  Your insurance policy offers replacement cost so make sure you schedule what you want insured at the appropriate value.

To make sure your buildings, equipment and other contents are properly insured or inquire about our valuation services, feel free to insurance [at] amsc.ca (connect with one of our AMSC insurance consultants for advice).

Learn more about insurance services offered by AUMA/AMSC on our website.