Making a Claim Effectively and Other Insurance Tips

Are You Properly Insuring the Value of Your Commercial Building?

If you intend to buy an existing business that operates within its own commercial structure, you may have some ambitious plans for its development. However, you must ensure that you fully protect your investment against all risks so that you can continue with your plans without unnecessary worry. Yet, are you confident that you have the right amount of coverage for your business as it stands and could you survive a catastrophic event such as a major fire? What do you need to know about valuation?

Assessing the Situation

Clearly, you will need to have a comprehensive insurance policy in place with the aim of recovering your business if the worst should happen. You need to be able to protect the building as well as its contents, including any specialist machinery or other equipment that may lay within. Within the policy, you should have coverage to help you prepare, rebuild or replace the building as necessary.

Much will depend on the stated building insurance value as everything going forward will relate to this figure. This value should reflect the building replacement cost to include all the ancillary expenses like permits.

Professional Valuation

Crucially, this value cannot be based on the perceived market value or on the amount that you paid to purchase the business, the building or both. Instead, you need to bring in a professional valuer who will consider all of the other assets like stock and machinery within the calculation. They should do this type of valuation every few years as well to ensure that you're keeping up with developments and that your coverage reflects current day expenses. When you bring in a professional valuer, they will be able to work with your insurance broker so that the policy can be truly tailored to your circumstances.

The Risk of Errors

You'll certainly want to avoid any miscalculation. Of course, you won't want to over-insure the building as this is simply wasted money. You will never receive the amount that you are targeting in the event of a claim, and this would not be a shrewd approach at all. You need to be even more careful to avoid under-insurance, leading to unnecessary complications. In this case, you may not get enough money to cover the rebuild, but you need to look at the small print as well. Some insurance companies may insert a clause that reduces the liability if they believe that you are under-insured "on purpose."

Next Steps

Talk with your professional insurance broker to get the ball rolling. A professional like that should help you determine how much commercial property insurance you need.