When it comes to purchasing or renewing commercial property insurance, ensuring correct property valuations is vital. It can make all the difference in providing sufficient protection and preventing coinsurance penalties amid covered property losses. Yet, inflation, escalating construction prices and supply chain challenges are creating a multitude of valuation headaches. Fortunately, there’s relief. By understanding essential factors that play a role in gauging property value, recognizing the risks tied to undervaluation and adopting strategies to enhance property valuation accuracy, you can navigate these stormy waters with a clear head.

To establish accurate property valuations, businesses and organizations should consider critical factors that influence assessment, such as:

Underestimating property value during insurance calculations can have serious consequences. You may find yourself underinsured after property damage or a total loss. An inaccurate insurance amount my require out-of-pocket expenses for complete rebuilding.² Depending on the scale of damage, this can lead to significant financial setbacks and even bankruptcy in some cases.

Undervaluation can also trigger penalties. Insurance companies often include coinsurance clauses in commercial property policies. These clauses encourage policyholders to maintain accurate property insurance valuations to avoid penalties. If coverage is below a specified percentage (e.g., 80%) of property value, a coinsurance penalty can result, limiting the recovery amount following a loss.

Improving property valuations is all about starting early and getting help. To enhance property valuation accuracy, consider implementing these tips:

As these challenges continue to impact the value of properties and their contents, organizations should assess the adequacy of their required insurance coverage on an ongoing basis and aim to make adjustments that will help them to ensure proper coverage and recovery following a catastrophic event.

As the landscape shifts and large property insurance procurement becomes more of a headache, we know you need more than a panacea for the pain – you need real risk management solutions. That’s why we pride ourselves on helping you stay ahead of the curve. Grounded by data, we synthesize vital insights to help you steer through uncertainties, achieve your business objectives, and thrive. We’re about more than just today’s solutions; we put processes in place to continuously identify new strategies that align with your unique organizational goals.

Contact us today and find out how we can help you strengthen your risk management strategy and put your future in focus.