Further steps in selecting property limits

In my previous post I had discussed ways to arrive at property damage limits. While instructive, it was only the beginning. Once you have arrived at the Actual Cash Value ACV or Replacement Cost RC, of the property, and whether to insure 80 % of it's value or higher, it is also important to assess whether the property is susceptible to damage by a single loss. Those properties that may be deemed susceptible to a large single loss are coastal properties, property near heavily wooded areas, etc. Also, remember that the coinsurance requirement must be carefully examined and adhered to. Just having a policy with an 80% coinsurance, without faithfully revisiting your property value(s) each year, can leave you on the short end of the stick when the time comes for the insurance company to pay out after a major loss, due to being underinsured. If you have only one location you might give major consideration to insuring up to 100% of the location's value, since a fire or other disaster could destroy all the property at one time. This is especially true of those properties I mentioned earlier in close proximity to locations prone to naturally occurring disasters. Obviously there are other major considerations when putting together your business insurance policy, which either already have been or will be addressed at some future date in this blog, but properly selecting your property limits is of utmost importance. I have only gone into a few examples of coverages and how they apply and considerations that must be gone into when developing your policy. It's always a good idea to consult your insurance professional (read agent here!) when you are striving to properly assemble your coverage.

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