Childcare Property Insurance – Buildings

Your building, like your home, is one of the largest assets you have, and therefore demands strict attention to how it is insured.

There is one fundamental insurance term called  INDEMNIFICATION that applies to this asset as well as all other aspects of property protection.

INDEMNIFICATION means to put yourself back in a position that you were in prior to a loss or claim.

How do you do that? Make sure you have Replacement Cost coverage. When it comes to insuring commercial property, replacement cost is set by industry standards. It starts with a minimum of $85 per square foot of insurable value. This is a minimum which can increase depending upon a number of factors. Morgan Insurance uses a Replacement Cost Valuation Tool developed by Marshall and Swift. It considers all factors in the development of a replacement cost.

Common problems with Building Replacement Valuation.

  1. Fair Market Value, or what you can sell your property for, has very little bearing on replacement cost.
  2. Never include your land value in your building replacement valuation, as your land is not going to burn or go away. Many lenders want your land value included in your insurable value to be equal to your loan. This is incorrect, and will only inflate your costs.  You will never get any recovery or value for the extra premium paid to your insurance company.