{"id":7086,"date":"2023-03-27T19:43:13","date_gmt":"2023-03-27T17:43:13","guid":{"rendered":"https:\/\/www.sv-merker.de\/?p=7086"},"modified":"2023-04-22T11:33:56","modified_gmt":"2023-04-22T09:33:56","slug":"asset-accounting-using-insurance-values","status":"publish","type":"post","link":"https:\/\/www.sv-merker.de\/en\/asset-accounting-using-insurance-values\/","title":{"rendered":"Why asset accounting is not a reliable tool for determining insurance values"},"content":{"rendered":"<div id='full_slider_1'  class='avia-fullwidth-slider main_color avia-shadow  av-small-hide av-mini-hide  avia-builder-el-0  el_before_av_section  avia-builder-el-first   container_wrap fullsize' style=' '  ><div   data-size='featured_large'  data-lightbox_size='large'  data-animation='fade'  data-conditional_play=''  data-ids='7002'  data-video_counter='0'  data-autoplay='true'  data-bg_slider='false'  data-slide_height=''  data-handle='av_slideshow_full'  data-interval='5'  data-class=' image_no_stretch'  data-el_id=''  data-css_id=''  data-scroll_down=''  data-control_layout='av-control-default'  data-custom_markup=''  data-perma_caption='aviaTBperma_caption'  data-autoplay_stopper=''  data-image_attachment=''  data-min_height='0px'  data-src=''  data-position='top left'  data-repeat='no-repeat'  data-attach='scroll'  data-stretch='image_no_stretch'  data-default-height='42'  class='avia-slideshow avia-slideshow-1  av-control-default av-default-height-applied avia-slideshow-featured_large av_slideshow_full  image_no_stretch avia-fade-slider '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\" ><ul class='avia-slideshow-inner ' style='padding-bottom: 42%;' ><li  class=' av-single-slide slide-1 ' ><div data-rel='slideshow-1' class='avia-slide-wrap '   ><img src='https:\/\/www.sv-merker.de\/wp-content\/uploads\/Anlagenbuchhaltung-2-1500x630.png' width='1500' height='630' title='Anlagenbuchhaltung' alt='Warum die Verwendung der Anlagenbuchhaltung f\u00fcr Versicherungswerte ein Risiko darstellt'  itemprop=\"thumbnailUrl\"   \/><\/div><\/li><\/ul><div class = \"caption_fullwidth av-slideshow-caption caption_center\"><div class = \"container caption_container\"><div class = \"slideshow_caption\"><div class = \"slideshow_inner_caption\"><div class = \"slideshow_align_caption\"><div class='avia-caption-content  '  itemprop=\"description\"  ><p>If you rely solely on the fixed asset accountings to determine insurance values, you risk underinsurance or premiums that are too high. We show the pitfalls and explain how to do it better.<\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div><\/div>\n<div id='av_section_1'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-1  el_after_av_slideshow_full  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div  style='height:40px' class='hr hr-invisible   avia-builder-el-2  el_before_av_four_fifth  avia-builder-el-first '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-3  el_after_av_hr  avia-builder-el-last  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><p><div  style='padding-bottom:0px; ' class='av-special-heading av-special-heading-h1  blockquote modern-quote  avia-builder-el-4  el_before_av_textblock  avia-builder-el-first   av-mini-hide'><h1 class='av-special-heading-tag  av-mini-font-size-overwrite av-mini-font-size-24'  itemprop=\"headline\"  >Why asset accounting is not a reliable tool for determining insurance values<\/h1><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div><br \/>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><p><em>20th March 2023 by P. Merker<\/em><\/p>\n<p>Many companies adopt the values from <span style=\"color: #90111c;\">asset accouting <\/span>one-to-one for the company&#8217;s property insurance. However, the <span style=\"color: #90111c;\">fixed asset summary is not an insurance summary.<\/span> Both instruments serve different operational purposes.<\/p>\n<p>It is therefore not surprising that the unchecked transfer of asset accounting leads to incorrect insurance sums. The consequences are underinsurance or excessively high insurance premiums.<\/p>\n<blockquote>\n<p>Careful! Many insurers restrict an underinsurance waiver if the insured value is determined solely on the basis of the asset accounting, namely on the items recorded there.<\/p>\n<\/blockquote>\n<p>We would like to show where the pitfalls lie and how to do it better.<\/p>\n<\/div><\/section><\/p><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='av_section_2'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-6  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-7  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2><span style=\"color: #5f6062;\"><strong>Table of content<\/strong><\/span><\/h2>\n<p><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#1\"><strong>What ist the function of asset accounting?<\/strong><\/a><\/span><\/p>\n<p><a href=\"#4\"><strong><span style=\"color: #5f6062;\">What, on the other hand, is the task of insurance valuation?<\/span><\/strong><\/a><\/p>\n<p><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#13\"><strong>What are the pitfalls of using asset accounting for insurance valuation?<\/strong><\/a><\/span><\/p>\n<p><strong><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#17\">Wich methods are more suitable for determining the insurance values?<\/a><\/span><\/strong><\/p>\n<p><strong><span style=\"color: #5f6062;\"><a style=\"color: #5f6062;\" href=\"#18\">Conclusion<\/a><\/span><\/strong><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='1'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-9  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-10  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2>1. What is the function of asset accounting?<\/h2>\n<p>Asset accounting can be found in almost every company: Either because the legislator wants it that way or the entrepreneur or even both.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Asset accounting records the <span style=\"color: #90111c;\">acquisiton or production costs of fixed assets under tax and commercial law a<\/span>nd documents <span style=\"color: #90111c;\">depreciation, write-ups and residual values <\/span>of the individual assets. The <span style=\"color: #90111c;\">fixed asset summary<\/span> (also known as the fixed asset grid), which is published by companies as an\u00a0 <span style=\"color: #90111c;\">annex to the annual financial statement<\/span>, is created on the basis of the fixed asset accounting.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">This means that the rules of commercial law and tax law apply to fixed asset accounting. These laws determine the values at which fixed assets are to be recognised and how changes are to be recorded.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">However, these rules do not apply to business property insurance.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Note: Asset accounting is made for tax and commercial law, not for insurance! For insurance purposes, it must therefore be adapted.<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='3'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-12  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-13  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2>2. What, on the other hand, is the task of insurance valuation?<\/h2>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">When <span style=\"color: #90111c;\">determining the insurance value<\/span>, on the other hand, the question is what amount would have to be spent in the insured event in order to procure the insured object as good as new. It is therefore a question of replacement values, restoration costs and new values.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">The definition is found in the\u00a0 <span style=\"text-decoration: underline; color: #90111c;\"><a style=\"color: #90111c; text-decoration: underline;\" href=\"https:\/\/www.gesetze-im-internet.de\/vvg_2008\/__88.html\" target=\"_blank\" rel=\"noopener\">Versicherungsvertragsgesetz (\u00a7 88)<\/a><\/span> .<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='4'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-15  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-16  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section  av-mini-hide\"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2>3. What are the pitfalls of using asset accounting for insurance valuation?<\/h2>\n<p>There are basically <span style=\"color: #90111c;\">two problem areas<\/span>, that need to be circumnavigated:<\/p>\n<ol>\n<li>Not everything that is recorded in asset accounting is automatically part of property insurance. At the same time, not all tangible assets that are to be insured are recorded in asset accounting.<\/li>\n<li>Often the valuations listed in the asset accounting cannot be used for insurance.<\/li>\n<\/ol>\n<div id=\"attachment_7052\" style=\"width: 855px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-7052\" class=\"size-gallery wp-image-7052\" src=\"https:\/\/www.sv-merker.de\/wp-content\/uploads\/Versicherungswertermittlung-per-Anlagenbuchhaltung-845x500.png\" alt=\"Der Anlagenspiegel ist kein Versicherungsspiegel: Wer allein auf die Anlagenbuchhaltung vertraut, um Versicherungswerte zu ermitteln, riskiert Unterversicherung und zu hohe Pr\u00e4mien.\" width=\"845\" height=\"500\" \/><p id=\"caption-attachment-7052\" class=\"wp-caption-text\">The fixed asset schedule is not an insurance schedule: those who rely solely on fixed asset accounting to determine insurance values risk underinsurance and excessively high premiums.<\/p><\/div>\n<p>It is immediately obvious to first clarify problem area 1 before dealing with the value approaches.<\/p>\n<p>Below are some examples (not exhaustive) to illustrate the problem.<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='6'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-18  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-19  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>a) Distinction between building and operating equipment<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">First of all, it is important to distinguish between <span style=\"color: #90111c;\">buildings and operating equipment in terms of insurance<\/span>. We have already dealt with this topic in detail here: <span style=\"text-decoration: underline; color: #90111c;\"><a style=\"color: #90111c; text-decoration: underline;\" href=\"https:\/\/www.sv-merker.de\/en\/operating-equipment-operating-buildings-2\/\">\u201eBuilding or equipment &#8211; that is the question\u201c.<\/a><\/span> Therefore, we will not go into further detail on where exactly to draw the line.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">However, we would like to justify why the accrual is important despite the usual summation adjustment:<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\"><span style=\"color: #90111c;\">Due to different price developments <\/span>&#8211; a very relevant topic especially in today&#8217;s world &#8211; the new values or replacement costs for buildings and furnishings change very differently. If <span style=\"color: #90111c;\">value supplements or indices <\/span>are used in the calculation &#8211; especially if flat-rate adjustment factors are used &#8211;\u00a0 <span style=\"color: #90111c;\">incorrect allocation can lead to incorrect sums insured.<\/span><\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Because of the great relevance, we have also dedicated a separate article to the topic of\u00a0 <a href=\"https:\/\/www.sv-merker.de\/en\/value-adjustment-clause\/\"><span style=\"text-decoration: underline; color: #90111c;\">\u201cValue Supplements in industrial property insurance\u201d<\/span><\/a>. There we show how to determine and apply them correctly.<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='7'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-21  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-22  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>b) Differentiation within the technical equipment<\/h3>\n<p>However, the work is not done with a clean &#8211; insurance-related &#8211; demarcation between the building and the operating equipment. An analysis must also be made <span style=\"color: #90111c;\">within the technical and commercial equipment,<\/span><\/p>\n<ul>\n<li>wether certain repair materials, spare parts, tools and production equipment, which are <span style=\"color: #90111c;\">current assets for tax purposes<\/span>, are to be allocated to the technical equipment for insurance purposes;<\/li>\n<li>wether <span style=\"color: #90111c;\">prototypes, models, samples, exhibits<\/span> etc., which are recorded as fixed assets, should be eliminated for insurance purposes;<\/li>\n<li>how <span style=\"color: #90111c;\">Software<\/span> has been accounted for: In intangible assets or in facilities. Software that is an integral part of a technical installation must also be allocated to the installation for actuarial purposes.<\/li>\n<\/ul>\n<p>Vehicles with road registration are also business assets, but are usually covered by motor vehicle insurance &#8211; in contrast to vehicles that do not have road registration.<\/p>\n<p>The same applies to\u00a0 <span style=\"color: #90111c;\">electronic devices,<\/span> which are covered by special electronics insurance.<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='8'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-24  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-25  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>c) Third party property<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">In principle, only the <span style=\"color: #90111c;\">property of the enterprise<\/span> is recorded in the fixed assets of a company. Exceptions can be, for example, goods acquired under <span style=\"color: #90111c;\">retention of title<\/span> by the seller or <span style=\"color: #90111c;\">leased assets.<\/span><\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Therefore, it must be checked with regard to the insurance agreements whether third-party property is also insured. If so, it should of course be included in the sum insured.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">For <span style=\"color: #90111c;\">leased assets, the accounting depends on what was agreed in the lease contract.<\/span> From an insurance point of view, however, the <span style=\"color: #90111c;\">agreements with the insurer<\/span> are decisive, so it is not sufficient to rely solely on asset accounting.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">It is important to match the details of the leasing contract and the insurance conditions in order to fully cover all insured property &#8211; regardless of legal ownership.<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='9'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-27  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-28  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>d) Disposed Assets<\/h3>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Honestly, we have not seen any, really any, asset accounting in which there was not some asset listed that no one could tell where it actually was!<\/p>\n<\/blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">This means that <span style=\"color: #90111c;\">fixed assets that no longer exist<\/span> are regularly found in asset accounting and therefore do not need to be insured.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">A second mistake often made is to take the <span style=\"color: #90111c;\">book value <\/span>of the asset grid out of the sum insured. It would be correct, however, to remove the retirements with the new values as well.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">In practice, the incorrect valuation of disposed assets is often the cause of over-coverage and thus of premiums that are too high!<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='10'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-30  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-31  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>e) Buildings and installations acquired or constructed before 1977<\/h3>\n<p>Buildings that were acquired or constructed before 1977 could be recorded in the fixed asset accounts at their book values at that time as acquisition or production costs. This is a result of the Accounting Directives Act, which has only prescribed the recording of acquisition or production costs in the fixed-asset movement schedule since 1987. In many cases, however, these were only available for the previous 10 years (i.e. up to 1977) when they were first applied. Therefore, the law allowed book values to be used as a basis.<\/p>\n<p>This also applies to operating equipment. Only today we will hardly come across operating equipment that is almost 50 years old, whereas 50 years is not an unusual age for buildings.<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='11'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-33  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-34  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>f) Exemptions for tax and commercial law accounting<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Commercial and tax law generally stipulates that all <span style=\"color: #90111c;\">assets must be recorded and valued individually and completely.<\/span> However, there are exceptions, for example in the form of\u00a0 <span style=\"color: #90111c;\">group evaluations<\/span>, for <span style=\"color: #90111c;\">low-value assets <\/span>\u00a0or in the form of the formation of a <span style=\"color: #90111c;\">fixed value<\/span>.<\/p>\n<p>If, for example, the low-value assets are recorded as operating expenses, they do not even appear in the asset accounting.<\/p>\n<p>In the case of group and fixed values, the principle of always reporting the actual, individual acquisition or production costs is broken.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">This means that we can neither rely on the completeness nor on the acquisition values for these items.<\/p>\n<\/blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">When determining the insurance values, it is therefore always necessary to look at the importance of these goods in the company and how they were recorded.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">As these are mostly items of minor importance, one should proceed\u00a0 <span style=\"color: #90111c;\">pragmatically<\/span> and nevertheless bear in mind, that small flocks also make a mess.<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='12'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-36  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-37  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>g) Subsequent production or acquisition costs<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">When already existing facilities are subsequently <span style=\"color: #90111c;\">expanded, converted or extended<\/span>, the cost incurred for this must be capitalised and added to the original acquisition or production costs.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">In this very <span style=\"color: #90111c;\">practical<\/span> case the subsequent costs are therefore recorded with\u00a0 <span style=\"color: #90111c;\">incorrect acquisition years. <\/span>If one now extrapolates to new values in order to determine the insured values, one <span style=\"color: #90111c;\">systematically obtains incorrect sums insured.\u00a0<\/span><\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='13'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-39  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-40  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>h) Used machinery, plant and equipment<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">A frequent challenge in determining insurance values by means of asset accounting is used machinery, plant and equipment, purchased on the <span style=\"color: #90111c;\">secondary market<\/span> or from <span style=\"color: #90111c;\">insolvencies<\/span>. In the case of this assets, the\u00a0 <span style=\"color: #90111c;\">second-hand market price<\/span> can be found in the asset grid &#8211; which, by its ver nature, is not a new value.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">However, the use of second-hand market prices for the determination of insurance values is generally not suitable, because in the event of damage it will seldom be possible to acquire a comparable machine again second-hand in the short term.<\/p>\n<\/blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">However, there are <span style=\"color: #90111c;\">exceptions:<\/span><\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">If you prove and document within the framework of the insurance value assessment that the second-hand market always has a suitable offer for the machine. Either way, a very critical look at the values in asset accounting is necessary, especially in the case of second-hand machinery.<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='14'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-42  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-43  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>i) Discounts and overpricing<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">The same problem arises if you have been able to negotiate particularly good\u00a0 <span style=\"color: #90111c;\">discounts<\/span> or have found a\u00a0 <span style=\"color: #90111c;\">\u201ctrade fair bargain\u201d<\/span>. In these cases, too, the recorded acquisition costs are too low for insurance purposes.\u00a0 <span style=\"color: #90111c;\">Grants<\/span> and <span style=\"color: #90111c;\">investment cost allowances<\/span> also usually reduce the acquisition costs to be recorded for accounting purposes. Therefore, these cannot be taken over for the sum insured without further ado.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Incidentally, the same applies with the opposite sign, if overprices were paid, for example because a machine had to be delivered particularly quickly. In this case, the acquisition costs may be too high for insurance purposes.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">It is therefore important to check and adjust the prices actually paid.<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='15'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-45  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-46  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>j) Machinery and equipment manufactured in-house<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">In the case of machinery and equipment produced by the company itself, the <span style=\"color: #90111c;\">entrepreneur&#8217;s profit<\/span> and the company&#8217;s <span style=\"color: #90111c;\">own labour <\/span>are generally not included in the capitalisation. However, this leads to the fact that the recorder acquisition costs are too low when it comes to determining the <span style=\"color: #90111c;\">insurance-relevant replacement values,<\/span> which assume <span style=\"color: #90111c;\">external services <\/span>and thus also include these costs<\/p>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='16'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-48  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-49  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h3>k) Other business transactions<\/h3>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">There are other circumstances to be aware of, but in practice these tend to be rare, especially for technical equipment, because of the shorter useful lives. These include <span style=\"color: #90111c;\">hidden reserves, dissolved reserves, businesses from the former GDR, standard values from 1959 or earlier, and changes in inout tax deduction and VAT.<\/span><\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Nevertheless, in real life we are often surprised how durable machines and systems can be and what old &#8220;treasures&#8221; can be found in the production halls.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">As you can see, it is extremely unlikely that all blurbs and errors will cancel each other out to the correct sum insured. In this case, you should play the lottery &#8211; because the stars are favourable for you right now &#8230;<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='17'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-51  el_after_av_section  el_before_av_section   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-52  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2>4. Which methods are more suitable for determining the insurance values?<\/h2>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">The surest way to obtain correct insurance values is to <span style=\"color: #90111c;\">create and maintain a separate &#8220;insurance inventory&#8221;<\/span>.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">The gold standard is to conduct a comprehensive <span style=\"color: #90111c;\">insurance inventory<\/span> in a first step to record all machinery, equipment, buildings and commercial equipment on site.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">In a second step, the <span style=\"color: #90111c;\">replacement value of each assetis determined independently of the acquisition or production costs listed in the asset accounting.<\/span> On this basis, the respective <span style=\"color: #90111c;\">value adjustments<\/span> to the base year can be derived. With this insurance schedule, the insurance values can be updated in the following years with high accuracy and little effort.<\/p>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Since a complete inventory on site is not always the best way to go for economic and time reasons, asset accounting often provides a good first overview of the size, structure, age and value of the machinery fleet.<\/p>\n<blockquote>\n<p class=\"styledelementstyleddiv-sc-2e063k-0\">Based on asset accounting and experience knowledge, we can decide which elements need to be included on site and which do not. The same applies to the valuation methods, which can include individual revaluations, taking over values from asset accounting using individual indices, estimated values or other approaches.<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='18'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-54  el_after_av_section  el_before_av_four_fifth   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  no_margin flex_column_div first  avia-builder-el-55  avia-builder-el-no-sibling  \" style='background: #f8f8f8; padding:50px 50px 20px 50px ; background-color:#f8f8f8; border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '  style='font-size:18px; '  itemprop=\"text\" ><h2>5. Conclusion<\/h2>\n<p>n summary, a reliable insurance valuation based on asset accounting is possible if one knows the pitfalls and proceeds carefully.<\/p>\n<p>Once you have an insurance statement, it is easy to continue it in the following years by<\/p>\n<ul>\n<li>correctly recording additions and disposals,<\/li>\n<li>calculating and applying individual value adjustments,<\/li>\n<li>and, if necessary,taking into account current values.<\/li>\n<\/ul>\n<p>How long can one &#8220;update&#8221;?<\/p>\n<p>This depends on the one hand on the investment strategy and on the other hand on how carefully the insurance assets are maintained. As a rule, five to ten years are realistic.<\/p>\n<blockquote>\n<p>It&#8217;s a bit like going to the dentist: with good care, it lasts longer; carelessness when cleaning becomes expensive.<\/p>\n<p>Sounds good? Give us a call, we&#8217;ll be happy to advise you!<\/p>\n<\/blockquote>\n<\/div><\/section><\/div>\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='after_section_18'  class='main_color av_default_container_wrap container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div class=\"flex_column av_four_fifth  flex_column_div first  avia-builder-el-57  el_after_av_section  el_before_av_section  avia-builder-el-no-sibling  \" style='padding:0px 50px 0px 50px ; border-radius:0px; '><p><div  style='padding-bottom:0px; font-size:24px;' class='av-special-heading av-special-heading-h3  blockquote modern-quote  avia-builder-el-58  el_before_av_codeblock  avia-builder-el-first  av-inherit-size '><h3 class='av-special-heading-tag '  itemprop=\"headline\"  >More practical tips? Read our newsletter! Free once a month.<\/h3><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div><br \/>\n<\/p><\/div>\n<\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='6'  class='avia-section main_color avia-section-no-padding avia-no-border-styling avia-bg-style-scroll  avia-builder-el-60  el_after_av_four_fifth  avia-builder-el-last   container_wrap fullsize' style=' '  ><div class='container' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-7086'><div class='entry-content-wrapper clearfix'>\n<div  style='height:100px' class='hr hr-invisible   avia-builder-el-61  el_before_av_one_fourth  avia-builder-el-first '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class=\"flex_column av_one_fourth  flex_column_div av-zero-column-padding first  avia-builder-el-62  el_after_av_hr  el_before_av_three_fourth  \" style='border-radius:0px; '><div  class='avia-image-container  av-styling-circle    avia-builder-el-63  avia-builder-el-no-sibling  avia-align-center '  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\"  ><div class='avia-image-container-inner'><div class='avia-image-overlay-wrap'><img class='avia_image' src='https:\/\/www.sv-merker.de\/wp-content\/uploads\/Ohne-Titel-1000-x-1500-px-2-300x300.png' alt='Philip Merker Expert for the appraisal of machinery and technical equipment' title='Philip Merker  Expert for the appraisal of machinery and technical equipment' height=\"300\" width=\"300\"  itemprop=\"thumbnailUrl\"  \/><\/div><\/div><\/div><\/div><div class=\"flex_column av_three_fourth  flex_column_div av-zero-column-padding   avia-builder-el-64  el_after_av_one_fourth  el_before_av_hr  \" style='border-radius:0px; '><section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p>Philip Merker, MBA<\/p>\n<div>\n<div>\n<div>\n<h2><a href=\"https:\/\/www.sv-merker.de\/en\/\">Merker Industriebewertungen<\/a><\/h2>\n<\/div>\n<section>\n<div>\n<p>Certified expert for the evaluation of machinery and technical equipment (DIN EN ISO \/ IEC 17024)<\/p>\n<p>Telephon +49 40 602 13 33<\/p>\n<p><a href=\"https:\/\/www.sv-merker.de\/en\/contact\/#contactform\">Email \u00adinfo@sv-merker.de<\/a><\/p>\n<\/div>\n<\/section>\n<\/div>\n<\/div>\n<\/div><\/section><\/div><div  style='height:100px' class='hr hr-invisible   avia-builder-el-66  el_after_av_three_fourth  avia-builder-el-last '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":5,"featured_media":7053,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-7086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts\/7086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/comments?post=7086"}],"version-history":[{"count":26,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts\/7086\/revisions"}],"predecessor-version":[{"id":7135,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/posts\/7086\/revisions\/7135"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/media\/7053"}],"wp:attachment":[{"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/media?parent=7086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/categories?post=7086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sv-merker.de\/en\/wp-json\/wp\/v2\/tags?post=7086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}