How do you benefit from an independent property appraisal?
The sum insured on your hotel insurance policy is determined by the policy-holder…………..not the insurance company or broker or agent………….although they offer their recommendations to customers.
Insurance companies and brokers can estimate the sum insured but they are not responsible if the value is wrong and your property is under-insured.
Estimates are only estimates.
Estimates can never take the place of accurate values based on documentation supplied by the customer.
Because of this reason; there are hundreds of thousands of properties under-insured all around the world….and Thailand is no exception.
The disastrous floods of 2011 revealed that Over 50% of flooding claims had problems because of under-insurance
The only way to be sure is to hire a professional.
The professional fee is microscopic compared to your potential loss if there is a disaster.
The sum insured on your policy should be adjusted each 2 years or annually in some cases.
A regular property appraisal is the only way to be sure you are insured for the correct value.
Below is a review of an example I used during a meeting with a hotel:
- Current insurance policy sum insured = 430 million Baht. (based on estimated value in 2012)
- If there is a small disaster and one hotel wing is destroyed by fire, the total damage is assessed at 100 million Baht.
- The insurance company hires an independent surveyor (they always do this for large claims).
- The surveying company investigates and appraises the total value of rebuilding the hotel and the cost of the damaged hotel wing.
- Their results show the hotel reconstruction cost has risen, it is presently 600 million Baht.
- The damage to the hotel wing is confirmed at 100 million Baht.
- Your insurance policy covers only 430 million Baht.
- 430 divided by 600 = 71.66 %
- Your property is under-insured and only 71.66 % is covered.
- 100 million Baht X 71.66% = 71.66 million Baht paid by the insurance company.
- Your hotel has to pay 28.33 million Baht of the damages.
If the damage is more extensive, the payment share is in the same proportion (71.66%).
Under-insurance saves you money if there is no claim; but is always expensive if there is a claim.
Over-insurance doesn’t help the customer, only the insurance company because they earn more premium without having to pay more in claims.
A reputable insurance broker and/or insurance company will recommend the following:
- A professional property appraisal to confirm you are fully covered.
- A revision of your sum-insured at regular intervals, maximum 3 years.