If you’re like most small to medium size businesses, your company has probably grown since you first purchased your business property insurance policy. It is always a good idea to have your property reviewed, especially if you’ve added to your space, or you’ve moved to or added another location. Even if you’ve maintained the same space for a number of years it is likely that your business has expanded in some way and therefore your insurance needs may have changed, which could require an accurate re-evaluation.
Property valuation basics
Property is considered to be anything that has value and includes real property, which is land and the permanent things on it, like:
• Outdoor fixtures
• Permanent machinery, and
It also includes business personal property, which is all other property that’s not classified as real property and can be easily moved, such as:
• Copiers and business machines, and
• Office furniture
Most companies offering business property insurance use two different methods for determining the value of property; replacement cost, which refers to the amount it takes to replace damaged or destroyed property with new buildings, equipment and furnishings; and actual cash value (ACV), which is the replacement cost of property, less the accumulated depreciation for age and wear and tear.
When establishing the value of your company’s real property, you might be inclined to insure it for the tax or market value. However, you should consider insuring it for the replacement value, because replacement costs have risen across most of the country even though market values have dropped in many areas.
Determining the value of your property
It is not very difficult to determine the value of your business property for your business owners’ policy but it takes a little time and effort. If you’ve kept good records, such as receipts and expenses, you should be able to estimate the replacement value of your office furniture, equipment, computers and other technological devices.
It is also important to take inventory of your stock and estimate the average value of it on a regular basis. Having valuables such as antiques, valuable artwork or other hard-to-replace items means having them appraised and including the total in your valuation.
One way to determine that figure is to engage a local contractor and request an estimate for replacing the building. Another way is to contact your agent who should be able to provide an accurate value of the items and suggest the proper business NY property insurance designed to protect them in the event of a loss.