Insurance to value is a common term in the insurance world. But do you know what it means and how it affects your business?
In general terms, insurance to value is having enough insurance coverage to pay to replace or repair property, such as a greenhouse, when a loss occurs.
The insurance-to-value calculation is important for both insurance companies and business owners. Companies want to make sure the right premiums are in place for the risks assumed, while business owners like you don’t want to be underinsured when something goes wrong. If the damages cost more than the coverage, that’s more money out of your pocket.
Both you and agents often look for the lowest premium possible when creating a policy. The simplest way to accomplish this is by lowering the values of the property.
This may take care of an obstacle—lower premium costs—up front, but the larger issue may come into play once a major loss occurs. Not only is there a possibility of falling short of coverage to indemnify you of your loss, but you may also be penalized for being underinsured. This is known as a co-insurance penalty.
For more information:
Hortica
www.hortica.com