reasonable amount of insurance for commercial property?



hi, what is a reasonable amount of insurance coverage for a commercial property in earthquake and fire & liability? The property is one story, 3 tenant with 5,500 sf building space. The value of property is about 1.6 million.
Is the amount based on the value of property or the cost to build the property?

reasonable amount of insurance for commercial property?
Rate these answers

3 Replies to “reasonable amount of insurance for commercial property?”

  1. The cost to rebuild the property is what you need to buy insurance amounts for. I could tell you get a $ 500K insurance policy, but if an earthquake happened and you only had $ 500K insurance and your property cost $ 1M to rebuild, you’d be left paying the additional $ 500K to build. So you need insurance enough to be comfortable rebuilding without going overboard. Most insurance offers a 10-15% buffer meaning if you ensure for $ 1M and it costs $ 1.1M they cover the overage for construction price fluxuation.

    I realize you are probably asking this because you dont want to pay a lot, but better to be safe than sorry… just tack on a reasonable amount of the cost with your next rate increase between your tenants. This will help offset your overhead costs to maintain the property.

    You dont have to worry about contents of the tenants, they’d need renters insurance. Only the property and your contents within the property need replacement values assessed.



  2. YOU NEED TO TAKE FIRE AND SPECIAL PERILS POLICY FOR YOUR BUILDING AND A SEPARATE LIABILITY POLICY.
    FIRE POLICY IS AN AGREED VALUE POLICY. YOU FIX THE AMOUNT WHICH YOU FEEL IS NEEDED EITHER TO REBUILD THE PROPERTY AS IT IS NOW ( COST OF REMOVAL OF DEBRIS IS COVERED FREE) OR THE MARKET VALUE OF IT TODAY. TO CATER FOR INFLATION OF MATERIALS YOU MAY ADD 10% TO ITS PRESENT VALUE AND INSURE FOR THE SAME. IF YOU INSURE FOR MORE VALUE IT WILL BE SEEN AS A WAY TO EARN OUT OF A CALAMITY AND IT IS NOT IN THE SPIRIT OF INSURANCE. GOOD LUCK

    V BALAJI
    TRICHY TAMILNADU INDIA





Leave a Reply

Your email address will not be published. Required fields are marked *