Insurance costs are rising. Your commercial property coverage needs to keep up.
Insuring your commercial real estate “to value” is crucial in protecting your business’s financial investment. Prices for both construction labor and materials are highly susceptible to market pressures, making repairs and rebuilds considerably more expensive after a local disaster. And if you have too little insurance compared to the value of your property, you could be penalized for underinsuring.
An annual review of your valuation—the cost to rebuild your business—is key. When deciding the valuation of your commercial property, you should ask yourself what it would cost to rebuild from the ground up, including debris removal. Keep in mind that, even though only a portion of your commercial building may be damaged, it’s possible you will have to renovate or even rebuild the rest if major systems or structural supports need replacement. The Associated General Contractors of America cited a 12.4% increase in costs for general contractors from March 2020 to March 2021, so talk to your agent or broker to make sure your valuation is up to date.
Note that you could face costly building ordinance requirements. Consider adding an ordinance and law endorsement to help with these costs if it’s not already part of your policy.