Providing adequate valuation of your property and its contents is critical to properly insuring your organization. It is important to ensure that replacement cost values for buildings, all personal property, and other affiliated costs (i.e. business income / extra expense) are kept current every year.
Property Insurance can be written in a monoline policy (not accompanied by other lines of coverage) or as part of a package policy (other lines coverage usually includes General Liability). If your insurance carrier is renewing your property policy “as-is” year after year, it could be detrimental to your coverage. With the rising cost of construction, real property and personal property need to be adjusted annually for inflation costs. Also, keep in mind that most property policies carry a deductible which can also impact your rates.
It is best practice to review your insurance policy annually and identify potential gaps in your coverage. Below are some risk management / loss control tips:
- Get a formal replacement cost appraisal of your building. This step should be repeated at least once every three years to five years.
- Create an inventory of the organization’s assets reflecting replacement cost value. Contents to include pictures, videos, and a record of the valuation of all personal property.
- Consider adding an annual inflation endorsement or provision to your policy (if your policy does not include one). This will help ensure policy limits are on pace with actual inflation.
- Consider adding a blanket endorsement and/or Agreed Amount Clause to your policy, which requires property values to be appraised annually. This takes more work, but may offer the best protection.
- Conduct a review of ALL coverage’s, exposures, and sub-limits to confirm they are included in in your worst-case-scenario estimate. Discuss with your broker the need for additional protection i.e. Ordinance or Law, Equipment Breakdown, Sprinkler Leakage, Business Interruption, Tenants Improvements, Valuable Papers, Data Loss, etc.
- Review contracts and leases to make sure your organization is in compliance.
- Review the terms and exclusions listed on your policy.
- Most Property Insurance policies do not include earthquake and/or flood. Consider purchasing a separate earthquake or flood insurance policy.
The moment of incurred loss is NOT the right time to discover that your organization’s property and contents are not adequately insured. Take action now to protect your organizations’ property. Let us know if you have any questions regarding property insurance coverage or if you would like us to provide a quote. We are here to help.