Value at Risk and your Business – Irish Hardware Assoc

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The Irish economy is currently undergoing fundamental change in the wake of the recent financial crisis. Every business owner or manager must now take time to critically examine their position and prepare for a return to economic growth in the next 12 to 18 months. It is time to steady the ship.

All areas must be examined and maximised in a time when every penny counts. One critical component of every business is insurance cover and value at risk. If you can be confident that your sums insured are correct and fully cover you in the event of any loss you are in the minority. According to Sean Cleary of Cleary’s Loss Assessors, underinsurance is the biggest problem with commercial insurance claims worldwide. He recommends that every business should carry out a value at risk survey every 5 years. A value at risk survey will give business owners the correct values to insure and eliminate any shortfalls in claim settlement due to underinsurance. The survey can also indentify areas where there is a waste of premium and save your business unnecessary expense.

Sean Cleary has over 25 years experience in settling claims for many types of business including many high profile claims directly related to the hardware industry. Hardware is one of the hardest hit commercial sectors of the current recession due to close ties with the construction industry. Getting through 2009/10 is going to be a major challenge for all  involved.

Ask yourself, if my business was to suffer damage through fire, flooding or burglary, will my business survive?

To answer this question truthfully you need to know the following, do you have business interruption cover and is it adequate? Do you know what amount of cover is on your stock and your building and are those figures up to date?

A value at risk survey is a highly technical procedure which is carried out by trained and experienced professionals. It gives a business an updated asset register and shows the calculated reinstatement value for all assets including buildings, machinery, stock, contents and loss of profits. The survey will also point out areas where cover may be insufficient or unnecessary and identifies insurable interests, for example, a building may be held in private ownership where stock and machinery may be held in company ownership, therefore the company policy will not pay for the property owned privately and vice versa.

Due to the detail involved and the technical nature of a value at risk survey, it is unreasonable for you to expect a broker to take full responsibility for one’s sums insured. It is up to the business owner to have this assessed professionally. Any business owner can now visit and download a free information booklet explaining the importance of value at risk. With the current economic climate and given the tightening of credit terms, it has never been more important to ensure that you are adequately covered. It is a gamble that few can afford to take.