A Simple Way to Reduce Business Insurance Premiums: Fixed Asset Management

Coping with rising insurance premiums has become an increasingly serious issue for business both in the US and worldwide. This has been particularly sharpened during the sharp downturn of the past year or so. Yet often overlooked is the fact that according to recent findings, as much as 70% of businesses are overinsuring their fixed assets!

The problem arises from a systemic lack of accurate and up to date information in the fixed assets register, the database which keeps all the information on tangible assets. What ends up happening in this scenario is paying for insurance on fixed assets they don’t even own any longer. In another case, premiums could be lowered just by more accurately calculating the depreciation in the value of a fixed asset.

This issue is compounded at the time of the insurance claim itself, when a lack of detailed information causes insurance companies to challenge or underpay on claims. This information includes detailed descriptions, serial numbers and proof of locations.Consider a home insurance claim in which you were unable to provide proof of ownership of the items you were claiming to have lost – the insurance company wouldn’t give you the time of day.

Often when equipment is replaced or becomes obsolete the finance department will see it as being a resolved situation, since the value has depreciated to nothing, so it doesn’t affect the financial figures.The practice of updating asset inventory records with this information is not generally prioritized. However, if and when the company does need to make a claim on the policy, insurance investigators will certainly not look kindly on the asset register not being up to date and fully detailed.

The lack of an up to date asset register is probably common knowledge to many organizations. But the majority would be unaware of the sheer extent to which this is the case. Even less known is the extent of the savings that could be made from proper asset managment on insurance costs, and the gains in improving the success and outcomes of claims. According to an expert in fixed asset management solutions, the amount of overpayment in insurance due to poor asset management stands at a staggering 20%. Surely that justifies some serious time and investment on making sure you have a decent fixed asset tracking system in place.

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