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.