What’s the value of a valuation?

19 January 2024

Insurers and brokers talk a lot about valuations and how important they are. But why is this and what does it mean?

Detail of antique wooden Italian furniture with a magnifying glass in the foreground

Valuations apply to buildings and contents. Here we describe the valuation of contents, fine art and personal valuables.

What is a valuation?

This is an assessment conducted by an expert who has many years of experience in valuations and formal training in their chosen area of expertise, for example furniture or jewellery. The valuer provides a ‘Retail Replacement’ value for an insurance valuation to replace an item with an equivalent in the event of a loss.

It's not based on the original price paid for the item, or what someone thinks it's worth now. It's based on several factors such as today’s value, market conditions, provenance, condition and material. A full valuation report should include a detailed description of the item, together with photographs, details of provenance if known and the location within the home.

Valuations today require much more due diligence, thorough research and specialist knowledge.

Why have a valuation?

Valuations are critical to establish the true value of the item so it can be insured at the right level.

In the event of a loss, a professional valuation provides the evidence to support a full claims settlement. It provides peace of mind that valuable possessions are correctly insured – assuming it is up to date.

As well as for insurance purposes, a valuation is useful when making a will, provides insight about inherited possessions, and peace of mind. It’s also possible to have items that are over-valued, let alone under-valued so worth being sure!

How often should an item be valued?

A valuation should be updated regularly, the frequency of which will depend on the type of item and market conditions. Seek guidance from a professional valuer or from your insurer about frequency.

For example, the luxury watch market is very changeable and values are constantly shifting so a valuation every year is advisable.

Any jewellery valued more than two years ago is most likely underinsured

Rachel Doerr, Doerr Dallas Valuations

What is underinsurance?

When an item is insured for less than it costs to replace, it is underinsured. In insurance terms, this means that in the event of a loss, a claims payment may be much lower than the amount needed to replace or even restore or repair the item. This may be because it was incorrectly valued at the time of insuring or because it has risen in value since the policy was agreed.

Important: it is the policyholder’s responsibility to review the sums insured for contents, art, antiques and personal valuables and inform us of any increase.

Is underinsurance an issue?

Why does underinsurance happen?

With busy lifestyles and markets rapidly changing, it's easy to lose track of the true value of an item. It’s also common to assume value based on misleading information despite the good intentions of the source. Other reasons include perception, personal taste or fashion which could lead to the belief that an item doesn’t have any value.

It is also easy to overlook items such as luggage or even a washing machine. New for old values may be surprisingly high.

What to consider when instructing a valuer

  • The company has the necessary specialist knowledge to conduct the appraisal
  • The Valuer’s name and biography should be provided with the proposal
  • The Company’s terms & conditions of business should be provided upon confirmation of the appointment
  • The Company has Professional Indemnity insurance of a minimum of £5 million and is happy to share its Certification if requested (Insurance Industry requirement)
  • The Company’s rules of engagement/service standards are available on request.

Are valuations expensive?

Not as much as you might think, plus an added benefit of having a professional valuation is they can also advise on such things as storage, display and care for items, all of which can impact value.

What do the descriptions mean?

The following lists of terms are ones that valuers use when appraising a collectible item – type, process, name, quality, age etc – and are typically ones that may be found in a valuation report.

Information kindly provided in association with Doerr Dallas Valuations.

For more information and guidance about valuations, contact our risk helpline or speak to Doerr Dallas Valuations, or one of our other preferred suppliers.