Case Study Extracts
- Rushton carried out a valuation of plant and equipment in 2011 for a client in the manufacturing industry. The sum insured before the valuation was £6.5 million and after the valuation £18 million. This shows an increase of 172%.
- A client instructed us to value two substantial food production facilities. Site inspection took place over a number of days which included physical inspection of the subject assets. The inspection was followed by detailed analysis and costing of the assets using the information gathered on site. Our valuation report concluded that the client was significantly over insured on their plant and equipment. As a result they were able to obtain a reduction on their premiums.
Britain – the birthplace of the Industrial Revolution and home to businesses in important sectors of the manufacturing industry including automotive, pharmaceutical, food, drink, tobacco, paper, printing, publishing and textiles are still getting the basics wrong when it comes to asset values. Rushton International has carried out valuations of plant and equipment for clients in all manufacturing sectors for over a century. Years on and analysis showed that sums insured are still grossly out of line, in fact under-insurance ranged from between 7-188% for plant and equipment within the manufacturing sector.
- The valuation of plant and equipment in this sector is often complex as the production process can involve a high capacity of equipment. The surface finishes of the buildings in this sector are often specialized to the client’s requirements and the additional costs of these finishes need to be taken into consideration as part of the buildings valuation.
- Incorrect insurance is common due to miscategorising of assets. Plant assets are often included as building items or even worse double counted by clients.
- Out of date asset registers used to establish sums insured.
- Failure to account for the disposal or acquisition of equipment means insurance values are grossly out of line.
- Replacement periods and new asset costs should be a major concern for companies that have not had plant and equipment valuations in the last 4 years or more. The most critical high value major equipment Rushton International value is manufactured in the USA, Euro zone, UK, Switzerland or Japan, and fluctuations in respective currency rates have proved to increase replacement costs from between
“On the advice of our brokers we appointed Rushton International to carry out a reinstatement insurance valuation of our buildings and plant and equipment to ensure our insurance values were adequate. In fact our insurance values reduced, triggering a size able premium refund. What’s more, the refund significantly exceeded the cost of the valuation. In our industry, where property insurance premiums have proven to be volatile, we would urge any food business to follow suit to avoid wasting premium.”
CEO, Food Manufacturing Business.