Business Appraisal & Insurance

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When you hear appraisal, you probably think of jewelry or home appraisals. Both of these are common types for things you personally own and are needed to secure insurance or financing. Appraisals have a place in the business community as well.

Small business owners often rely on their business to financially provide for the family, today and in the future. In these cases, it’s essential that owners understand the value of their business. They hire companies to perform a business valuation or appraisal. Business appraisals are also a critical part of the business insurance process.

What is a business appraisal?

It’s impossible to properly insure property if you don’t know the value of it. A business appraisal is a process of determining how much your business or assets are worth today. Inflation and the value of the dollar often change, causing your business and asset value to change too.

Insurance companies also use appraisals when a claim occurs to determine the cost of covered damage. Insurance policies even include an appraisal clause to help both parties validate the actual worth of any claim.

What is an appraisal clause?

An appraisal clause gives insurance companies the right to hire a professional appraiser to assess damage that results in a claim. The appraiser will visit the property location, review the damage, and calculate how much it will cost to repair the damage. The final cost calculated is the amount the insurance company will pay (if you have insurance for that amount).

This same clause also gives you the right to hire an appraiser if you disagree with the insurance company’s determination.

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Small business property insurance

If you’re like most small business owners, you probably have insurance. When was the last time you reviewed your policy to make sure all of your business assets are protected? Chances are you have grown over time, and growth often includes acquiring more assets to run a successful business. Are you at the same location? Did you add machines or technology to increase efficiency? Do you want to take these steps in the near future?

The best way to avoid a disagreement in value during the claim process is to make sure all of your assets are included in your business property insurance policy. Make a list of your current assets including equipment, machines, technology, and office space. Compare it to the information listed on your existing policy. Are there any discrepancies? If there are, notify your insurance company or CoverWallet so they can update your coverage and make sure it's comprehensive.