Like many other sectors of our economy, building material costs have seen significant increases in the last few years. That’s why it’s important that building owners check their insurance coverage to make sure it will be adequate to repair or replace a damaged structure – whether that’s a farm building, equestrian barn, home or commercial facility.
Given today’s busy work schedules and personal lifestyles, many building owners may not have kept track of the insured value of their buildings to determine if they will be sufficiently covered in the event of a significant loss. If not, an insurance checkup is important to safeguard your building investment.
One farmer recently lost the roof of his farm shop in a storm. The cost today to replace the trusses, roof and ceiling exceeded the total insurance assessment value of the entire building 15 years ago, and to rebuild with today’s material costs would be even higher.
Here are steps to take to make sure you are protected:
- First, ask your insurance agent about the total construction cost of comparable buildings which they have recently insured. This will provide a good idea of what level of insurance you need.
- If your insurance is for the replacement cost, find out if there is a deduction for depreciation. If so, a resulting settlement could be inadequate to replace a damaged or destroyed building.
- Be sure to include the value of any specialized equipment or finishes the building may include.
- Some building owners may choose to under-insure to save on insurance premium costs, figuring they can apply those savings to help cover a possible future loss. But consider carefully whether you or your company can absorb the potential cost.
If you haven’t done so recently, contact your insurance provider now to determine if any policy adjustments are needed to make sure you are adequately protected in case of a future loss.