Adequate insurance-to-value is required for buildings and business personal property in order to avoid underinsurance penalties.
Many business owners are unaware that their business is in jeopardy when their property is not insured to its required value. Unfortunately, many insurance agents do not understand how to guide their clients through the insurance-to-value process to eliminate potential pitfalls.
If a business is not insured for an adequate amount, the result is that a partial loss will not be paid to the extent expected. We have seen business owners paid less than 50% of the total repair estimate!
The best approach is having an insurance agent that knows precisely how to navigate through these potentially crippling policy conditions. This will help you to deal with and/or eliminate coinsurance penalties.