Authored by Sara Weathers
Ensure Your Coverage Reflects Current Rebuilding Costs
Repair and rebuilding costs for commercial property often increase due to inflation, labor shortages, and rising material prices. If your law firm’s insurance limits have not kept pace, your coverage may be insufficient after a major loss.
This is especially important for firms that own their office buildings or have invested in significant renovations, technology, or business property. Firms that lease space should also ensure valuable equipment and furnishings are properly protected.
It is also important to understand the difference between replacement cost and actual cash value coverage. Replacement cost covers the expense to replace damaged property with new, comparable items, while actual cash value deducts for depreciation. Your policy’s terms determine how claims are calculated.
What Should Your Firm Review?
- Building limits: Ensure your building’s insured value reflects current rebuilding costs, not its market value or original purchase price.
- Business personal property: Review coverage for computers, office furniture, equipment, and other key assets.
- Replacement cost vs. actual cash value: Confirm how your policy values damaged property and whether depreciation could reduce claim payments.
- Renovations and upgrades: Update your coverage after major improvements, office expansions, or equipment purchases.
- Coinsurance provisions: Determine if your policy includes coinsurance requirements that could impact claim payments if your property is underinsured.
Regularly review your property insurance limits to ensure they reflect current rebuilding costs and asset values. Consulting your insurance professional can help identify gaps and clarify your policy’s response after a loss.
