Reduce Property Insurance Premiums Without Increasing Exposure
Are you over-insured, under-insured, or just unsure? Take the guesswork out of your risk management decisions. We apply state-of-the-art technology, advanced methodology, and the experience of our staff and studies. The result is a detailed report which is accurate, supportable, and documented.
Whether you are a building owner or tenant, property insurance rates and construction costs are increasing at high rates and are forecasted to continue this trend. It is essential to obtain independent appraisals from experts to avoid over-insuring at higher premiums or exposing the company to unknown risks by under-insuring.
- Determining the true value of assets–and separating the insurable values from the uninsurable requires special skills and expertise.
- Value estimates based upon square footage are only as good as the underlying assumptions–spaces used for manufacturing, warehousing, or offices have different construction costs–it may ignore variations in climate, geographic areas, labor rates, building codes, and quality.
- The costs for building additions or installation of new equipment are usually added to the insurable value base, but when the assets are removed, their respective insurable values should be deducted. Often times they are not and these phantom assets are artificially inflating insurance coverage and premiums.
Oftentimes, original construction costs are used as the starting point, then trended upward over the years, resulting in a significant over-insured position.
Success Story – Over-Insured
A complex of 29 buildings that started with one structure in 1930 was the profile of a major hospital facility in the Midwest. Each addition over the years had different construction types, varying floor heights, unique finishes, more modern electrical and HVAC systems, and often involved the removal of major property components of a prior building to accommodate the expansion.
The replacement cost of those components was never determined and deducted from the current coverage before adding the new costs. There had never been an insurance appraisal and current coverage had grown to $135 Million.
A complete engineering-based insurance appraisal by a highly experienced firm resulted in a current replacement cost of $85 Million. Yes…a $50 Million difference!
Missed Opportunity – Under-Insured
After declining to spend less than $10,000 for an insurance appraisal of the headquarters building, the CFO soon deeply regretted that decision. During a storm, lightning struck the gas main which exploded and took out the pipe supplying water to the sprinklers. The resulting $35 Million total loss was not covered by the $20 Million policy and the company went out of business.