Defvas Project

In Partnership with TEGoVA and the IRRV

EUROPEAN VALUATION APPLICATION - 4ASSESSMENT OF INSURABLE VALUE

Defvas Project

In Partnership with TEGoVA and the IRRV

INTRODUCTION

• The purpose of insurance is to protect the insured from loss.

• The valuations used must assess the extent of that prospective loss if the insurance is to be adequate

• Valuation for insurance purposes

Defvas Project

In Partnership with TEGoVA and the IRRV

DEFINITIONS

• In general, the insurable value represents the maximum amount of cover agreed with an insurer

• Basis of assessment will usually be recorded in the insurance contract and is likely to be one of the following:- New replacement cost (“New for Old”)- Indexed New Replacement Cost- Depreciated Replacement Cost- Cost of Rebuilding Only

Defvas Project

In Partnership with TEGoVA and the IRRV

RECOMMENDATION

• The ‘insurable value’• Services• Price increases

Defvas Project

In Partnership with TEGoVA and the IRRV

ASSESSMENT METHOD

• The Cost Approach (or the Contractor’s Method) is used to assess the new replacement cost and the depreciated replacement cost

• Usually the underlying land does not need to be valued unless it is subject to an identified risk covered by the insurance policy

• When determining the depreciated replacement cost, allowance should only be made for the depreciation arising from physical deterioration

• VAT is only taken into consideration if the insured is not entitled to recover input tax.