From time to time residents will be told that their building needs to be revalued for insurance purposes.
This is perfectly normal (but of course this is Peverel/Firstport!)
The reason for the valuation is to work out the cost of rebuilding the property.
Every 5 years or so a surveying firm will be brought in by Firstport to assess the cost of any rebuild, so that the appropriate level of insurance can be placed.
Any revaluation is to an extent an educated guess . That said a range of 10% either way of the true cost is acceptable. Between survey periods an agreed with the insurance companies index is used.
As accurate a rebuild cost survey as possible is vital.
Suppose that a valuation survey is carried out that suggests that a rebuild would cost 460,000 pounds? (the same amount coincidentally as Firstport's fine for the fatal fire at Gibson Court that led to the death of Irene Cockerton)
So insurance premiums are based on the 460,000 pounds risk to the insurance company.
Let us assume for a moment that the building burns down(perhaps a contractor's urgent safety warnings are ignored yet again?)
The rebuild actually costs 920,000 pounds (this could be because Firstport have used their own contractors?)
It will not be the case that the insurance company will only pay out on the insured 460,000 pounds, because it was 50% under insured they will halve the payout.
Thus for a rebuild costing 920,000 pounds only 230,000 pounds will be paid out.
If the rebuild cost however is 920,000 pounds and the insurance valuation is for 880,000 pounds, whilst only 880,000 pounds will be paid out, this would be seen as reasonable so no penalty will be imposed by the insurance company.
So what happens if the building is over insured?
Lead us not into temptation!
In this case the rebuild really does cost 460,000 pounds, but the valuation is put at 920,000 pounds.
The insurance company will pay out the 460,000 pounds and no more. Meanwhile they will happily have been collecting the extra premiums on the 920,000 pounds valuation. That they are collecting premiums for the extra 460,000 pounds that is not at risk means they have extra funds available to give "commissions/rebates or contributions to "expenses" to those that place the insurance all paid for of course by residents by way of their service charges.
Hence it can be seen that Peverel/Firstport have a direct financial interest in over insuring their developments.
All they would be needed is a valuation to be carried out by a company that undertakes a large number of valuations on behalf of Peverel/Firstport and who would be "appreciative" of the work? And since any such company have a very easy "get out of jail card" simply by claiming the valuation was the "opinion of a surveyor"
If you are about to have a valuation carried out, at the very least residents should insist that the person carrying out the valuation shows his identity and qualifications?
