Your livelihood is dependent on the survival of your business, so it is imperative that you protect it against any potential threat—big or small. For instance, a fire could destroy your business’ warehouse and the contents inside.
If self-insuring is not an option to combat the risk of loss, it is wise to obtain property insurance. This coverage comes in many forms to suit your specific needs.
Types of Property You May Need To Insure
Here are some examples of property that are commonly insured:
- Buildings and other structures (owned or leased depending on the lease structure)
- Furniture, equipment, and supplies
- Money and securities
- Records of accounts receivable
- Leasehold improvements and betterments you made to the rented premise
- Electronic data processing equipment (computers, etc.)
- Valued documents, books, and papers
- Mobile property (construction equipment, etc.)
- Property in transit
- Satellite dishes
- Signs, fences, and other outdoor property not directly attached to the building
- Intangible property (goodwill, trademarks, etc.)
- Business contingency for suppliers
- Ordinary payroll
- Extra expenses as a result of loss
Are You Buying Enough?
One of the most important aspects of purchasing property insurance is making sure that you have purchased enough coverage to be adequately protected. A typical policy will provide the replacement cost value for your building and business personal property. Replacement cost value is the amount that is necessary to replace, rebuild, or repair damages with similar materials, without considering depreciation. Actual cash value, on the other hand, is the value of your property when it is damaged or destroyed. This amount is typically determined by subtracting the depreciation from the replacement cost value.
Most property insurance policies include a coinsurance clause, which requires you, the policyholder, to adequately insure the property or participate in the loss if it is underinsured. If the property is adequately insured for current replacement cost, you can receive full coverage for your losses. Should you decide to purchase inadequate coverage for your property, you may be obligated to pay a percentage of the loss which can be substantial.
The cost of building materials and labor changed at unprecedented rates due to the pandemic and supply chain issues. This has had significant impact on limit adequacy. If you sustain a property loss it is possible the limit on your policy is not enough to make you whole at today’s costs.
Rebuilding Your Tomorrow, Today
Insurance to value (ITV) is an assessment of the complete cost to replace insured property and is a critical element of a comprehensive property insurance program. According to the Institute for Business and Home Safety (IBHS), 1 in 4 businesses are forced to close their doors following a major loss. Some business owners find their limit of insurance to be understated by 50% to 75%, resulting in significant, unexpected out-of-pocket costs, business disruption or termination of operations, as insurance limits are exhausted.
Sentinel understands that determining your business’s value is critical, so we’re here to help. Contact our team today to learn more about our property insurance and loss control solutions to Safeguard Your Success.