Equipment Appraisal Blog | Understanding Machinery Appraisals

Need an Insurance Loss Settled? An Equipment Appraisal Can Help.

Posted by Equipment Appraisal Services on Mon, Jan 25, 2021 @ 08:00 AM

Machinery and Equipment Appraisal Insurance Loss Settlement


Did you know that over one-third of businesses that go through a disaster or property loss never open their doors again? This is primarily due to insufficient insurance or the inability to prove the value of equipment and other assets lost in the event. How do you protect your business against this kind of unexpected problem? An accredited equipment appraisal with a signed certification can go a long way towards ensuring you have adequate insurance to protect against a loss and to support equipment values during an insurance loss settlement.

Involved in an Insurance Loss Claim for Machinery & Equipment? Accredited Appraisals Will Assist in the Process.

Determining Insurance Coverage

When you are buying business insurance, you want to make sure all your assets, including machinery & equipment, are being covered for their current market or replacement cost value. Many people rely on tax return depreciation as a quick guide to appraising it, but the actual value may be much different than what standard accounting depreciation allows.

If the machinery & equipment is overvalued, you may be paying too much for premiums and will not recover the full amount you have estimated during a loss claim. If the assets are undervalued, the insurance company may have concerns that you did not pay for sufficient coverage and not be willing to pay you a fair value for casualty claims. An accredited machinery & equipment appraisal can go a long way to providing proof of value for your assets and assist in determining how much coverage you need.

Dealing with a Loss

When your business suffers an actual casualty loss, during this stressful time, you will want to reach a fair settlement as quickly as possible, to avoid business interruption. Can you prove what your equipment was actually worth? Having support documentation completed by an accredited machinery & equipment appraiser with signed certification helps to prove the real market value and can be utilized in an insurance settlement. The valuation is an objective, unbiased, defendable report that you can present to the insurance company during the claim process.

Even if you have not had a report completed before the loss, appraisers can retrospectively value the machinery & equipment as of the casualty loss date. An accredited equipment appraiser will sign a certification attesting to the value as of the prior loss date. They have the experience and expertise to research the market and make the appropriate adjustments to reflect market value as of the effective date. Make sure the firm employs accredited valuation experts who are members of the American Society of Appraisers (ASA). This ensures they follow the protocols of providing objective, supportable reports that will hold up in any settlement negotiation.

Tags: Insurance Loss, machinery & equipment appraisal, appraisal, equipment valuation, Insurance Claim Asset Appraisal

How Does an Insurance Claims Appraisal Help Advance Your Claim?

Posted by Equipment Appraisal Services on Mon, Sep 02, 2019 @ 08:00 AM

insurance claim appraisal

When your business suffers a loss, the insurance policies that you've been paying into are intended to cover those losses and keep you operating smoothly. However, the reality of the process sometimes falls short of your expectations. If you're dealing with an insurance claim with an adjuster who isn't seeing why your equipment is worth more than they're offering, an insurance claims appraisal can help make the process go more smoothly. Why? Here's a look at how this process works.


How Does an Insurance Claims Appraisal Help Advance Your Claim?

Though insurance claims adjusters have some level of specialty, such as vehicles, homes, injuries or similar areas, that doesn't mean they're a specialist for your business' specific equipment. It's very easy to mistake your machinery that has a particular option or kit added to it for one that does not, a difference that can mean your claim settlement is offered at thousands of dollars less than what your machinery is actually worth when all of those aspects are taken into account.

The claims adjuster may not have a good idea of how to evaluate the condition of your equipment, especially when it comes to determining the value of your machinery before it was damaged in a fire, flood or other devastating events. Was the equipment in that poor of condition before, or were the bare wires caused by a fire? Was it that rusty before the flood? It's very easy for an adjuster who is not accustomed to seeing your equipment in its operational state make poor decisions in trying to determine the machinery's original condition and remaining useful lifespan.

Is the claims adjuster taking into account the market conditions at the time? If your region suddenly had strong construction growth following a flood, that machinery may be worth more today than it was in the past, when construction wasn't as strong. That means that the replacement value of that piece of equipment may have gone up significantly. Your construction company may be in a worse financial situation if you accept a lower settlement on your insurance claim than what the equipment is actually worth. 

What about the kind of value the claims adjuster is calculating? If your equipment has been completely ruined beyond any hope of repair, is the adjuster calculating salvage value of what the equipment is worth for scrap and parts? Are they calculating the original value, that may leave you short of funds when it's time to replace that equipment, especially if it's been many years since it was initially purchased? Are they calculating replacement value minus what they expect the salvage value to be, leaving the old equipment for you to deal with in terms of salvage and disposal? It's important that the value that you receive when your claim is settled will actually cover the expense of replacing that equipment, including installation, shipping and similar expenses.

By having an insurance claims appraisal performed, you can ensure that your interests are being protected during the claims process. This allows you to focus on getting your business back on its feet instead of babysitting claims adjusters and the claim process. However, make sure that you're working with an accredited equipment appraiser to ensure that the appraisal report that you receive is free of the appraiser's interests.

Tags: Insurance Claim Asset Appraisal