Whether you are a personal or commercial insurance client, we need to work together to determine how much your building and personal property are worth in order to determine how much property insurance you need. Sometimes, this can be a very difficult question to answer, and the actual numbers may surprise you.
Most insurance policies insure buildings on a replacement cost basis. Replacement value is the cost to rebuild the building, including labor and materials. The market value of your home or building can vary greatly from its replacement cost. Market value is fluid and varies according to supply, demand, and the sale of other similar buildings in your area. While market value may fluctuate up and down, replacement cost is more likely to slowly increase over time.
It is important to evaluate your building value each year before your insurance renewal to make sure you are insured to value. Have you made any substantial improvements or additions to the building that would cost more to replace? Have you added a central station alarm or a sprinkler system, which might make you eligible for a discount on your property insurance?
You do not want to be underinsured in the event of a loss. Luckily, we have tools that can help us calculate the replacement cost of any structure based on its construction and local labor and materials costs. If you ever have a question regarding whether or not your home or building is insured to value, please give us a call and we can walk through this process.
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