The recent earth quake in New Zealand is an unfortunate reminder that a natural disaster can hit at any time. No doubt there will be many business owners in New Zealand who will now be making claims to their insurance companies to cover the damage caused. Undervaluing your assets is an easy trap to fall in.
Company accounts are unfortunately not a business owner’s best friend in assessing the replacement value of assets used in the business. Depreciation techniques do not take into account the market values or inflation, so they rarely show the true replacement value of an asset. Estimating the value of property yourself as you fill in the insurance application could also critically undervalue, where the objective may be to save cost on the policy.
Insurance companies rely on your estimate, therefore it is important to be thorough when sharing your specifics so you are not left out of pocket. Consider all assets that would need to be replaced in the event of a disaster and the costs involved in bringing them into use. Successful planning will ensure you are ready for the unexpected.
Involve your trusted advisor from the start to help make this as easy as possible.
AIMS Accountants for Business, if you like the way we think, you’ll like the way we work.