Commercial property insurance is a crucial coverage that no business can do without. But have you heard of Replacement Cost Value? If not, here is the blog post jotting down the importance of replacement cost value in property insurance. It adds an advantage to your business insurance coverage.
What is Replacement Cost Value?
The replacement cost value calculates the cost of rebuilding your property or asset from the ground up using similar materials. In addition, this value should match your commercial property insurance policy’s building limit.
How to Find Out the Value of Your Commercial Property?
Before finding the best coverage for your commercial property, you need to understand the two important broad categories of commercial property i.e., Real Property and Business Personal Property.
Here real property refers to anything that is permanent. For instance, the land where the business is located, the permanent building, and the machinery or equipment within it are essential considerations. On the other hand, business personal property refers to the things that you can easily move in and out of your business space such as computers or laptops, furniture, office equipment, etc. Once you comprehend what requires insurance in your coverage, the next step is to determine its value.
Ensure that you keep a good note of all the records related to business property expenses. So that you can demonstrate them at the time of claiming the insurance coverage. This includes office lease, machinery, furniture or anything else that your business requires to function.
Thus, when you buy online property insurance or offline, you may be given the choice of insuring your property at replacement cost or actual cash value. Two different calculation methods used to determine how much you will receive from the policy to cover an item that is lost or damaged. Both methods have different pros and cons, so it’s better to understand from the best Insurance broker companies like SecureNow who can help you to get the best quotations instantly.
Actual Cash V/s Replacement Cost Insurance
If you have an actual cash insurance policy. Your claim payment will cover the cost of buying the item in the same condition as the one you lost. For example- If machinery in your industry is damaged in fire, insurance company assesses its current value in used condition. The calculated amount is then provided as a payment for the damages incurred.
In contrast, if you have a replacement cost insurance policy, the claim will cover the lesser cost of restoring the assets to their original condition or buying new assets of the same kind and quality as the ones lost. For instance, If someone steals your TV, the claims payment will enable you to purchase a new TV with identical features, if possible. Well, the payment received will not be the same as you originally paid for the TV.
Want to know more about importance of replacement cost value in property insurance? Talk to us! At SecureNow, we believe in sharing the best coverage with the clients that is beneficial for them and their businesses. You can contact us to get the best quote today!
