WOULD YOU BET YOUR COMPANY’S FUTURE ON THIS POKER HAND?
The answer to this question is a resounding “NO”, however every day that is exactly what happens with most insurance buyers when it comes time to renew their company commercial insurance coverage. You may find a great agent, a reputable insurance company and broad policy coverages, however if you don’t buy enough insurance, you are taking unnecessary risk.
Too often policy limits are based on “best estimations” when it comes to buildings and equipment, which can lead to your insurance company not being able to pay you enough to rebuild and put you back in the same position that you were in before a major loss. It is typical than an insurance buyer requests somewhere in the neighbourhood of 80%, if not even less, of what it would cost to rebuild and replace equipment. Without the right payout from your insurance company, getting you back into business is an uphill climb.
If you insure on a Replacement Cost basis, your company’s declared values (which are used to establish your policy limits) should accurately reflect what it would cost today to rebuild your building(s) and replace your equipment with new property. As time goes by many companies lose sight of what the cost would be of rebuilding a new building of like kind and quality in today’s market. That important piece of machinery that was manufactured in the US and cost $500,000 when the Canadian dollar was at 95 cents US, is now probably closer to $650,000 when you consider inflation.
As you sit down to establish your renewal values, improve your chances of having the right policy limits, by considering the following factors:
- Increase in Demolition costs
- Current material costs and labour in your area
- Fees that you may incur for architects, engineers, etc.
- New building codes that you may be required to meet during a rebuild (Sprinklers)
- Current exchange rate for equipment manufactured outside of Canada
- Any market trends that may be affecting building materials adversely
- Consider smaller items that you own (shed, transformers, fencing, paving, etc.) that you may previously not included. These can add up quickly.
Woodsure’snumber one goal is getting your business back up and running quickly and to the same state it was prior to the loss. If your renewal is coming up and you would like assistance assessing your changing needs, contact your Woodsure representative.
If you considering The Woodsure Program and would like a quote, we would be happy to assist you.