Insurance to Value is the ratio of the amount of insurance to the value of the property.
It is important to determine the correct Insurance to Value number for commercial buildings to keep insurance premiums reasonable while guaranteeing any building loss that happens will not force you to pay out of pocket.
The market value of your building is not the amount you choose as your building’s property limit or insurance value.
Only the replacement cost value of your property matters to insurance companies. It should matter to you too because if you choose the wrong number, you may be underinsured for even a partial loss.
Determining the replacement cost of a commercial building is not easy.
An insurance appraisal may be the safest way to estimate the cost to repair or replace your property. However, short of paying an appraiser, there are factors to consider when determining your building’s value. These include direct and indirect costs, the facility’s age, building code upgrades, site accessibility, and unique or non-typical building characteristics.
Businesses need to ensure that their commercial property insurance includes correct property valuations when purchasing or renewing their policy. Doing so can make all the difference in providing sufficient protection and preventing coinsurance penalties amid covered property losses.
Conclusion
Insurance to Value is important for commercial buildings to ensure that the property is adequately insured. It is up to the property owner to determine the correct Insurance to Value number. An insurance appraisal may be the safest way to estimate the cost to repair or replace your property. Businesses must ensure that their commercial property insurance includes correct property valuations when purchasing or renewing their policy.
If you’re unsure that you’re adequately covered, call an Emery & Webb insurance agent at (845) 896-6727 or click here.