Equipment Inventory & Appraisal

The modern-day risk manager knows only too well that change is constant.  Updating personal property values each year used to be as simple as applying the inflationary factor provided by your underwriter or broker.  Now a risk manager needs to consider many questions and issues, including:

• Have we acquired or divested ourselves of facilities this year?
• Has there been any rationalization of our manufacturing plants, transfer of production lines, change in facility occupancies, major additions to plant capacities, etc.?
• Are we keeping up with the day-to-day turnover of capital assets, especially retirements, within our facilities? 
• Asset lives in high tech and healthcare can average five to seven years.  It’s typical to keep good records of acquisitions. However, sometimes retirements are not recorded as diligently, leading to excess coverage of ghost assets.
• Are we using the correct cost trend factor to adjust personal property values from one year to the next? 

Cost trends are indicators of average change - they are not absolutes.  They vary from industry to industry, and should not be used beyond seven to 10 years. The three trends below are “average” trends from well-known sources - note the variation over an 11-year span:

• Are we using a trend specific to our particular assets?
• Using an “average” trend is inadvisable when more appropriate choices are available.
• What trends should I use for my overseas/non-US facilities, and how should I account for rapidly changing exchange rates?
• Do we have assets of significant value that would not be replaced or repaired even if they were only partially damaged?
•  What is the value basis of my assets (cost of replacement new, book value, net book value, fair market value, allocated value from an acquisition or internal transfer value) and is it appropriate for insurance?
• Has technological change affected the replacement cost of my assets?

No one likes surprises - least of all in a post-loss situation.  Re-establishing personal property replacement costs on a five- to seven-year cycle is the basis of good underwriting practice.

Appraisal Approaches
American Appraisal employs various approaches for insurance appraisals of personal property, depending on the occupancy and needs of our clients, as detailed in the following charts:

Why American Appraisal?
American Appraisal provides insurance valuation services for virtually all private and public sectors. We have performed some of the most challenging insurance valuations of the past decade, and we employ one of the world’s largest, most experienced teams of equipment valuation specialists. Our consultants have seen everything from steel mills and semiconductor fabrication plants to state capitol buildings and school districts.