PROPERTY I NSURANCE : HOW TO COVER YOUR PROPERTY – PROPERLY! There are many different types of
These discussions tend to start one of two ways: “Well, I bought it for XYZ amount, so that’s how much I need to insure it for,” or, “I can get XYZ for my building, so let’s insure it for that.” Do either of those sound familiar? If so, you are not alone! It is important to remember: Insurance companies don’t care about your building’s market value! Market Value: Supply & Demand How much are buyers willing to spend on a property? That number is the market value. It’s what most of us are familiar with and what is characteristically driven by supply and demand as well as the overall status of the economy. If you recently purchased a building, you may think that how much you paid for it is how much it P A G E 6 1 |
valuations that can apply to property, and it is not hard to confuse them. But with regards to insurance, it is replacement cost – not market value- that will be used to insure your property. When it comes to property insurance, one of the more common frustrations (besides paying the premiums, of course) stem from the inevitable conversations regarding how much insurance should be placed on a building.
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