How much is your business equipment, plant and tools really worth?

When it comes to business equipment, plant and tools cover you’ll find varying differences in the way in which assets are valued. Some insurers will offer cover on a new for old basis so you’ll want to ensure your figures and sums insured are accurate replacement values. Other insurers will provide cover on an indemnity basis which means putting you back into the position you were in before the claim. You may also need to factor in wear and tear when calculating your sums insured.

Insurance is a complex area for business owners and valuing plant and tools can often be tricky for the purposes of insurance. Often a major problem occurs while assessing the value of the asset for the purposes of insurance due to accounting practices. The value in the accounts will often not match the requirements for insurance due to accounting methods of depreciation and valuing of assets over time. You as the business owner or manager are therefore required to have some idea of the true cost of buying an equivalent piece of equipment and to will need to set your sums insured at that level.

The wider definition in insurance policy wording tends to be ‘Plant, Machinery and All Other Contents’. All other Contents include everything not more specifically insured as ‘Contents’. It doesn’t cover items that should be classified as buildings or stock. It also may not include computers and electronic equipment that are not part of plant, but it does include everything from stationery to desks and filing cabinets that are unlikely to have been capitalised. It may also cover tenant’s fittings like alarm systems, carpet tiles, partitions and mezzanine floors plus employee personal effects not more specifically insured. In other words ‘All Other Contents’ has a wide definition and the value involved in replacing them could be a significant addition to the value of plant and machinery.

Learn More

The Insurance Act 2015
Understanding under-insurance
Importance of getting your sums right
Calculate Business Interruption Insurance
Calculate sum of buildings cover
Calculate stock and contents
How much are your business equipment, Plant and tools really worth?