Keeping Insurance Values Up-To-Date*

Many businesses are not Adequately Insured at Current Values

·         According to recent studies, an estimated 75 percent of commercial businesses are underinsured by an average of 40 percent or more.

·         Underinsurance can greatly impair, or even bankrupt a business trying to recover from a major loss.

Rebuilding Yesterday’s Building at Today’s Prices is a Challenge

·         Buildings constructed just two years ago cannot be rebuilt at anywhere near the same cost.

·         You and your agent or broker should make sure that your protection is keeping pace with today’s rapidly escalating construction costs. 


A Quick Insurance Review

     Let’s start with some basics about how insurance works.  Insurance protects people and companies against major financial losses that occur because of damage or loss of property.  Insurance companies determine premiums by taking into account the risks associated with the business, the amount of coverage they need to be fully protected, their past history and statistics that predict what percentage of businesses will suffer a loss or file a claim.  The amount of property insurance coverage is based on the cost to rebuild and restore your business, not market value.


The Rising Cost of Rebuilding

     In recent years, we’ve experienced devastating weather events at home and worldwide.  In 2011 alone, the U.S. experienced $17.3 billion in insured losses from 100 significant events, many unprecedented and unexpected.  Some decimated entire communities.  And, experts predict that severe weather will likely continue. 

     Add to that, skyrocketing building costs.  As communities here and abroad rebuild, the demand for building materials and labor has intensified, driving up prices.  For example, in the fifteen months between the second quarter 2010 and third quarter 2011 the following materials increased significantly.


Ø  Copper pipe +26.5 %                         

Ø  Steel Rebar +15.8%

Ø  Structural Steel +13%

Ø  Drywall +5.5%

Ø  Plywood +11%

Ø  Lumber +11.7%


Insurance-To-Value (ITV)

     Insurance-to-value is a critical element of any well-constructed property insurance program.  If you and your agent or broker keep values up-to-date, this can protect your business by providing you with the coverage you need should a major loss occur.