An essential detail that every insurance agency must get right when insuring properties is valuation.
Continuous cost fluctuations in the construction industry have made getting an accurate commercial property insurance policy a real challenge.
Rising costs due to the pandemic and associated reasons have made it difficult for insurance agents to properly value commercial property insurance, especially property that is still under construction.
As economic factors continue to change, properties need new valuations to ensure proper insurance coverage.
Why Are Commercial Property Insurance Costs Surging?
Heading into the period when the pandemic began affecting different industries, natural disasters were the main issue that most commercial insurance agencies and their clients had to face.
Since the start of the pandemic and the many lockdowns happening worldwide, supply chain, resource, and production disruptions continue to be a problem going on two years later.
Insurance agencies across the world are increasing premiums in response to the ever-rising costs of building materials due to lower supply and increased demand.
In addition to the supply chain issues affecting everyone, insurance agents are also seeing higher insurer costs being handed down due to losses sustained over inadequate insurance rates and undervalued properties.
These rate issues are the effect of skyrocketing costs weighing down the whole commercial property insurance industry as claims on undervalued properties are being paid according to current construction costs.
Essentially, insurance agents have been losing money paying claims for properties valued even just a year ago considering how quickly construction costs are increasing right now.
How Does This Affect Commercial Property Owners And Insurers?
Whether suffering a catastrophic loss due to a natural disaster or some other cause, an undervalued commercial insurance policy, depending on how it is written, could leave property owners without enough money to rebuild.
It could also result in commercial insurance agencies paying more than anticipated with construction costs up as much as 50% in the last couple of years, then being forced to hike premiums for everyone in order to recuperate.
With Rising Costs Comes A Need for New Property Valuation
The only way for a commercial insurance agency to avoid these concerns is through accurate and current property valuations, as valuation for insurance purposes is directly related to construction rebuilding and replacement costs.
The more unstable the construction industry is due to the various reasons mentioned above, the more critical frequent property valuation assessments are to ensure owners are carrying enough property insurance.
Only through accurate property valuation based on what it will cost to repair and rebuild can insurance policies that protect both the property owner and the insurance agency be written.
Get Commercial Property Correctly Valued
The critical message moving ahead in 2022 as costs continue to rise and inflation is becoming more significant is that commercial property owners must meet with their insurance agents and arrange a new property valuation for their own protection.
New, recent valuations will likely bring with them higher commercial property insurance premiums but in the long run, it is necessary to provide enough funds to rebuild should disaster strike.
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Ask an experienced and knowledgeable commercial Insurance agency such as Service Insurance Group to furnish an accurate property valuation and provide coverage based on that figure so the insurance will adequately cover any future loss.
If looking for any type of personal or business insurance, the Agents at Service Insurance Group shop for the right personal or business insurance policy to fit individual needs – call them at (979) 300-7345 to get a quote!
