The importance of insurance valuation for property owners

One of the most important aspects in owning a property is to make sure that it is protected through insurance valuation. These usually cover the building itself, but also other structures on the premises as well as liability issues. The special part about these insurances is that they are almost always subject to proper valuations. The insurance valuation itself can be done by various companies, who are experienced in these types of insurances. This way it is made sure that the prices are always competitive enough to secure a contract with another party or company.

Once you have found or negotiated the right insurance premiums for your property, there are certain risks that you need to protect yourself against. Calculated risks, meaning that you are taking out an insurance policy based on probability. These basically compensate for any costs that may arise from the risk in question. A classic example would be fire insurance. If there is a high chance of the building catching fire due to external factors, it is best to have this covered by an insurance company. Otherwise, any potential damage would not be covered.

This is where the aspect of proper valuation becomes important. The premiums for these insurances are always calculated based on expected damages. We will use fire insurance as an example again: if there is a recorded case in the past, where the building caught fire and caused greater than 50% of its value in damage, then it will be priced accordingly to compensate for similar incidents in the future. 

This makes it far cheaper than insurances that aren’t backed up by recognisable instances or data sets. Once this happens a few times with a property owner, they will have to pay out for more expensive valuations which will eventually lead to higher insurance premiums.