 |
|
 |
| << Back |
| |
Posted: Tuesday, April 20, 2010
By: Andy Swant BA, FIIC. CRM, Partner, Cohen and Lord Insurance Brokers Ltd. |
Business people are in business to make money and secure a good future for themselves. Building your nest egg so that you can sail off into retirement has been a common theme over the last number of years. There are many ways to do this and one piece of that puzzle has to do with insuring your property correctly. In many cases, the Insurance limit on your building is too low and when a claim occurs, the Insurer will penalize you and not payout the full payment for your claim. This will cost you a few very hard earned dollars out of your pocket! Insurance Companies and Insurance Brokers are spreading the word about Insuring your Building to its Full Replacement Cost Value. The reasons are plentiful for doing this and I’ll explain in greater detail on why this has become a hot button in Insurance for business owners.
With respect to the Business Insurance policies that are available, there are essentially two common ways to insure your property under your policy.
The most common way is insuring your building to its full replacement cost with the policy on a 90% Co-insurance Clause, while the lesser know way, but much more secure way is to insure the property on a “Stated Amount – no Coinsurance Basis”. I’ll discuss both and you’ll understand why it is a very important to insure your assets to the full values on a “Stated Amount Basis”.
Many Business owners concentrate on their business – that is what makes them money. They rely on their Insurance Broker to guide them through the Insurance process. An important part of this process is insuring your assets to their full replacement cost value. Your property is a big part of your assets and insuring them properly should not be taken lightly. Ultimately, the owner is responsible to make sure the property is insured to its full replacement cost value. Many owners only insure their property based upon the 90% Co-insurance clause in their policy. In basic terms, the property has to be insured to at least 90% of its full replacement cost in order for the insurer to pay 100% of the claims costs. If it is not insured to at least 90%, then a co-insurance penalty is applied by the Insurer and the owner is not going to be paid for the full amount of the claim. Hence, there is a shortfall and the owner is responsible for the shortfall. This shortfall could be hundreds of thousands of dollars. Questions arise, how did this happen, who is responsible, how do we correct this?
When you are insured on a 90% Co-insurance basis, you must make sure that you are insured to your full replacement cost values. This entails, what are the costs to rebuild this structure, what about the tenant improvements- who is responsible to insure these, what about the city by-laws and who is responsible for these, how about demolition and debris removal costs? What about professional fees and am I covered?
A good way to find out the costs to rebuild your building is to contact local building contractors and get their feelings on these costs. You can then discuss this with your Insurance broker and can make the necessary changes to make sure you are fully covered. However, to be absolutely sure that you are fully covered in the event of a claim, you should change your policy to a “Stated Amount – No Insurance Clause”. In essence, this entails hiring a Certified Appraiser to come out and view the property and prepare a detailed report that outlines the exact costs at that time to rebuild the property. This method involves the Appraiser issuing the report and the Insurer agreeing to insure the building to this amount with no Co-Insurance to be applied. Basically, the Insurer will pay out any claim and will not apply a penalty because you have a proper appraisal and it shows the building is insured to its full replacement cost. This report will cost you a small amount of money, however, knowing that your assets are protected properly and you could be potentially saving thousands of dollars, will alleviate your concerns and you can concentrate more energy on your business.
In summary, insuring your building asset to its full replacement cost value is one important piece of your puzzle. Your Insurance Broker/Appraiser can help you insure it properly. Speak with your Insurance Broker now if you are concerned or when your Business renewal is due. Don’t wait for the claim, be proactive to protect your assets!!
|
| |
|
http://www.cohenandlord.com/
|
|
 |
