The valuation of a property or of assets can take many forms. This depends on the reason for the valuation. And the final outcome will vary, depending on this reason.

Some people who have suffered losses due to earthquake or fire have been shocked when their insurance paid out. The gap between the actual worth of the property and what their insurance covered was a big one. Under-insured property – like farms or business premises – can pose a real problem.

Too many people accept the word of their broker when taking out insurance on their properties. While most brokers offer sound advice, they are not always qualified to value your property. This insurance valuation gap may create a problem if you are insuring a 2-bedroom home. But if you own a wine farm or a warehouse, this gap could ruin you.

When you take out insurance on your property, you are asking for full replacement in case of loss. This means that your insurer should replace like for like – placing you in the same position that you were in before your loss. This can take the form of fire, flood, theft, or earthquake.

Therefore, you need to know the replacement cost of your property. This is not the same as market value – even if you have just purchased it. And it is not municipal value either.

Most people are not directly involved in the construction industry. They don’t have key information about building costs. For example, your home may be 25 years old and worth R1.5m on the property market. What would it cost to rebuild your home at today’s building costs? If, for instance, building costs in your area are R9 000.00/m², then multiplying that by your floor space – let’s say 200 m² – your replacement cost would be R1.8m. That R300 000 shortfall would give you a very different result if your home was consumed by fire.

This above example is very simplistic. Other factors which play a part in an accurate insurance valuation can include:

  • other structures on your property
  • finishes; building materials
  • the gradient of the land (if scaffolding is needed)
  • delays and demolition
  • professional fees (such as architects)
  • and escalation

As you can see, you are responsible for getting the correct information to your insurance company. An accurate insurance valuation means that when the worst happens, you can come out the other side intact.

Our team are seasoned professionals and offer insurance valuations as well as many associated services. Please call us on 0860 999 440 or visit and let us be of service.