Building Coverage

Since I’m in the Insurance industry I thought I’d start with discussing how the modern insurance package policy covers risks and reacts in certain situations. We’ll take some detours along the way to connect items like facilities planning to Section 1 (property) coverages. Section 1, or Property coverages, are usually split into coverages into Building and Contents.

Typically the most contentious issue when insuring a building is valuation. Most policies today are written on a “replacement cost” basis so the question really is “could you completely replace the building you own and occupy given an event that would completely raze the structure?” Remember that we’re dealing with construction costs – not what you can buy it for, or its market value. So, and especially in areas of market depression or artificially inflated construction costs there are issues of both over and under insurance. But for our purposes – Coordination with a consolidated Business Continuity Plan – we’re recommending that your building coverage be sufficient to replace your location given a total loss event. If you a building owner see if you can get a building appraisal – not a real estate appraisal – but a construction appraisal, and if possible, get more than one. They can be wildly different. At least then you’ll know what you’re working toward and what it will mean to you financially.

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