The rising costs are not just affecting construction. The cost of tools and other equipment are increasing as well. For insureds, this means the limits on your insurance policies, for both structures and contents, must be increased to ensure full recovery for repairs or rebuilds after a loss.
Do you have replacement cost coverage or actual cash value coverage? If your building is destroyed, replacement cost will cover most of the cost of materials and labor to replace the entire building of equal quality. If your property has actual cash value coverage, depreciation will be factored in the replacement cost and your claim payout will be reduced accordingly.
Is there a discrepancy between the current replacement cost of your property and your policy limit?
Your policy limit, especially on older buildings and structures, can be insufficient if it was calculated several years ago and based on prices that are now outdated. When reviewing your coverage limits, make sure you are considering the current cost of materials, labor, design, etc. that you would incur if you were to replace your building now.
What can you do to protect yourself?
Applying the standard 2-3% inflation factor to your property coverage may no longer be enough to escape being underinsured. Now is the perfect time to talk to your trusted insurance advisor at ComTech-Leavitt Insurance Services to see if reevaluating your replacement cost estimates on your structures is necessary. It could save your organization from financial havoc in the future.
Give us a call today, and let’s review your coverage.