Risk Management

The case study highlights a significant issue faced by a client regarding the accurate valuation of their building for insurance purposes. The client had a building with a correct replacement value of 10 million EUR but had only declared a coverage amount of 5 million EUR. This underinsurance led to a critical situation when the building suffered fire damage, resulting in repair costs of 1 million EUR. Due to being 50% underinsured, the client only received 0.5 million EUR in compensation, illustrating how underinsurance can severely impact financial recovery even in partial loss scenarios. To address this issue, Aon provided a comprehensive building valuation service that included a detailed assessment of the property. The service involved three key components: a survey of the building assets, an on-site visit, and a thorough valuation report. The report took into account local construction cost levels, area measurements, structural solutions, technical systems, and the intended use of the spaces. The tailored solution ensured that the client had an accurate and updated replacement value for their building, which is crucial for avoiding underinsurance. By utilizing Aon's expertise, the client was able to secure sufficient insurance coverage, thereby mitigating the risk of financial loss in future incidents. This case underscores the importance of regular property valuations to align insurance coverage with current market conditions and construction costs.