Understanding Accurate Insurance to Value: Hurricane-proofing your Clients
Understanding Accurate Insurance to Value: Hurricane-proofing your Clients
As insurance agents, it is crucial to have a comprehensive understanding of the risks associated with your clients' businesses. Owning an office comes with its own set of responsibilities, and one crucial aspect is understanding accurate valuation to determine the right amount of insurance coverage. Undervaluation can have serious consequences, leaving office owners to foot the bill for rebuilding expenses. In this blog, we'll explore the concept of Insurance to Value (ITV) and its importance in protecting your clients.
Underestimating the value of an office building can have serious financial consequences in a disaster. Just imagine the scenario where insurance coverage falls short, leaving the insured to cover the rebuilding costs out of their own pocket. This situation becomes even more challenging when the office owner is a landlord missing out on income from rent. Accurate ITV calculations consider not only the property value but also factors such as inflation, materials, service costs, building permits and more. By ensuring proper valuation, you can help your clients protect their business from potential financial setbacks and secure the coverage they need.
Let's take a closer look at the consequences of inaccurate ITV. In the following example, an office owner failed to revisit their policy for years, unaware that their ITV had significantly increased. This increase was due to a combination of rising property value of the office combined with the growth of their business, resulting in higher income. Unfortunately, this oversight left them vulnerable to potential financial hardship when a hurricane hit their city and resulted in a total loss.
To ensure comprehensive and adequate coverage, it's crucial to work closely with your client annually. Together, you can assess not only the value of the property but also consider factors like contents, rebuilding costs, business income, and more. Additionally, factors such as inflation and demand surge after a storm can impact the overall cost. Be sure to touch base annually with your clients and update their coverage as needed. Changes such as a new roof, a growing business, new employees, increased property value, and more can all have a significant impact in making sure they have adequate coverage. Help your clients avoid being part of the 75% of underinsured small businesses in the United States, as reported by a 2023 Hiscox survey. Stay proactive so your clients can stay protected!
The above scenario is strictly documented for illustrative purposes only and provides an example of what a policy could cover. It is intended to provide a general overview of the program described. Please remember only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions. Program availability and coverage are subject to individual underwriting criteria.
Commercial Insurance Coverage for Office Owners
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