Options for Business Owners or Groups of 1 If you are a business owner with employees or if you are your business’s only employee, we canhelp you obtain group health insurance coverage. The group plans costs are tax deductible have … Read More
WHAT ARE THE RISKS AND ADVANTAGES OF INSURING YOUR COMMERICAL PROPERTY WITH A 100% CO-INSURANCE CLAUSE?
A majority of property insurance policies contain a co-insurance provision. A coinsurance provision requires the insured to insure the covered property to a specified percentage of the full replacement cost value, typically 80, 90 or 100 percent. Now, a higher co-insurance clause will offer a lower rate, but what do you really gain by this?
Insurance companies use co-insurance provisions to avoid inequity and to encourage insureds to carry a reasonable amount of insurance in relation to the replacement value (or actual cash value, depending on which basis the policy is written) of their property.
Co-Insurance essentially penalizes the insured for loss recovery if the limit of insurance purchased by the insured is not at least equal to the specified percentage (80, 90 or 100 percent) agreed to in their contract for insurance.
To further confuse matters, there are several building coverages options in the marketplace and some options may not be available based on the age of the property and/or lack of updates.
Property coverage options
Guaranteed replacement cost coverage guarantees your property will be rebuilt.
Extended replacement cost coverage usually provides up to 125% of the building limit.
Replacement cost coverage pays to rebuild but only to the limit listed on the policy.
Functional replacement cost provides coverage for “like” but lesser quality products. This is typically an option for older brick or ornate buildings that have had some updating.
Actual cash value is a depreciated valuation which pays what the building is worth “as is”. This is usually the only option for older properties without updates for wiring, plumbing and heating and/or other higher risk properties. This valuation is difficult to estimate without a professional appraisal.
Co-insurance is secondary to the above coverage options, meaning you will have both a coverage type and a co-insurance clause.
The way you will know what coverage you have is to reference your policy “declarations page”. You should be able to find it fairly easily a few pages into your policy and it will list building, building ordinance, loss of income, and deductibles likely all together.
To better understand the financial repercussions for under insuring your building see the below examples of claims payouts:
Scenario 1 – Major fire, resulting a total loss claim
$1,000,000 Building Replacement Cost Coverage
80% Co-Insurance Clause
At the time of loss, the actual replacement cost of the building is $1,250,000. You are under insured by 25% triggering a co-insurance penalty;
Claim payout is as follows:
$1,000,000 – (less 25% under insured penalty of $250,000) = $750,000 payout. You are short $500,000 + your deductible to repair the building.
Scenario 2 – Small 2-unit fire, resulting a $550,000 loss
$1,000,000 Building Replacement Cost Coverage
100% Co-Insurance Clause
At the time of loss, the actual replacement cost of the building is $1,100,000. You are under insured by 10% triggering a co-insurance penalty;
Claim payout is as follows:
$550,000 – (less 10% under insured penalty of $55,000) = $495,000 payout. You are short $55,000 + your deductible to building the building.
As you can see in both examples, it can be very expensive to under insure your property. Further, the higher the co-insurance clause, the less room for calculation errors, increased building costs due to housing booms, tariffs on materials or even forest fires driving up the cost of wood.
My best advice: Insure your property to 100% of its replacement cost value, add extended replacement cost or guaranteed replacement cost riders if you qualify for them. If those options are not available to you, ask for an agreed value policy which should remove the co-insurance rider. Agreed value policies will not help with inflation or other increased building costs, however, you will not be penalized if your calculations are wrong.
Ask your agent to re-calculate the replacement costs for you at least every other year and certainly if you remodel your property, let your agent know. I would rather see people with more building and building ordinance coverages then low deductibles all day long. Some people think they are winning against the insurance company by not insuring their building fully and getting a lower premium, but come claim time, as you can see by these payout examples, this will be a big financial bite!
Remember that insurance is a contract in which, you are agreeing to specified coverage for an agreed amount of premium. This is your investment property and your contract with a company to help you mitigate the risk of loss.
This article was provided by Stacey A Scott Insurance Agency Inc. dba Madison Avenue Insurance Group in Woodinville, WA. For more information they can be reached at email@example.com or at www.madisonaveins.com
COVID-19 Business Resources
Eat and Drink Local
We are dedicated to helping drive business to our local restaurants and wineries during this COVID-19 shutdown.
Below is a list of restaurants and wineries open for curbside pick- up and/or delivery. The list is sorted by city.
Caring for and serving our clients remains a top priority while we adapt and adjust to new ways of operating.
We are thankful for your continued business and look ahead to a bright future.
In the meantime, we extend our best wishes for all to remain safe and healthy during this time. GO EAT & DRINK Local!
Amaro Bistro Curbside 4-8pm 425-485-2300 http://amarorestaurant.com
Beardslee Public House Curbside 425-286-1001 https://beardsleeph.com
Grazie Restorante Italiano 425-402-9600 https://grazierestaurant.com
Menchies Curbside (425)286-6039
Pasion Tequila Curbside 11am-9pm 425-488-1308 http://pasion-tequila.com
Ranch Drive-In 425-486-2677 http://www.ranchdrivein.com
Russells Curbside (425)892-8492 https://www.russelllowell.com
Spartas Curbside or Delivery; Order Online https://direct.chownow.com/order/8189/locations
The Bine Curbside 425-908-7464 https://www.thebinebothell.com
The Cottage Curbside or Delivery 425-286-6332 https://thecottagebothell.com
Cactus Curbside & Delivery 425-893-9799 https://cactusrestaurants.com/location/kirkland
Carillon Kitchen Curbside www.chownow.com
Carillon Kitchen 7am-7pm425-739-6363 https://www.carillonkitchen.com
Casa Ricardo’s Curbside 425-285-9160 http://casaricardos.com
Couzins Café https://www.couzinscafekirkland.com
Deru Market 8am-9pm Curbside 425-298-0268 http://www.derumarket.com
El Toreador Curbside 11am-930pm 425-883-7570 https://www.eltoreador.com
Geroge’s Curbside Curbside425-827-6622 7am-3pm https://www.georgeskirkland.com
Hearth (Heathman Hotel) 425-284-5800 https://www.hearthkirkland.com
Hollywood Baked Goods Curbside 425-999-3544 https://www.hollywoodbakedgoods.com
Isarn Thai Soul Kitchen Curbside & Delivery (425) 298-4429 http://kirkland.isarnkitchen.com
Jersey Mike’s Subs Delivery https://www.jerseymikes.com
Joe’s Burgers Curbside & Delivery 425-576-0003 https://www.joesburgers.com
Just Poke Curbside & Delivery (425) 658-3387 https://justpoke.com/locations/kirkland
La Corona Curbside & Delivery 425-820-2709 https://www.lacoronamx.com/
Le Grand Bistro Curbside & Delivery (425) 828-7778 https://www.bistrolegrand.com
Mediterranean Kitchen Curbside 425-823-8101 https://mediterraneankitchens.net
Pagliacci Pizza Curbside & Delivery 206-453-1717 https://www.pagliacci.com
Plaza Garcia Curbside & Food Truck 425- 814-3012 https://www.plazagarcia.com
Ristorante Paradiso Curbside 425-889-8601 https://www.ristoranteparadiso.com
Royal India (425) 820-2303 https://royalindiacuisine.com
The Box Burgers Curbside + Food Truck (425) 821-0777 https://www.yelp.com/biz/the-box-and-burgers-eatery-kirkland
The Lime Curbside 425-827-3336 https://www.thelimekirkland.com/#menus
The Lodge Sports Grille Delivery https://www.thelodgesportsgrille.com/menu
Wing Dome Pickup and delivery 425-822-9464 https://thewingdome.com
Bis On Main Curbside 425-455-2033 www.bisonmain.com
Castilla Restaurant Curbside 425-625-2931 https://www.castillarestaurant.com
El Toreador Curbside 11am-930pm 425-883-7570
Pomegranate Bistro Curbside and delivery 425.556.5972. https://www.pomegranatebistro.com
Snohomish Restaurant & Wine
Kasia Winery Curbside and delivery (425)941-0224 https://www.kasiawinery.com
Mill Creek Restaurants
Amato Catering & PicNic Table Curbside (206) 683-2900
Chef Anne Marie’s Catering & Eatery Curbside or delivery
Pickup and delivery 425-419-4760 https://heritagewoodinville.com/menus
Kestrel Vintners 509-786-2675 https://kestrelwines.com
Hollywood Tavern Drive in, 425-481-7703 https://www.thehollywoodtavern.com
Offering curbside pickup. Wed-Sat 11-6 and Sun 10-5 (206)683-2900
Offering curbside pickup, order online. https://www.thepizzacoop.com
Zeeks Pizza Offering curbside pickup daily 11-10pm. (425)893-8646 https://zeekspizza.com/locations-hours/zeeks-pizza-woodinville
Brian Carter Cellars Free shipping 425-806-9463
Cougar Crest Estate Winery Pick up call 425-398-9999 Shipping call 509-529-5980 cougarcrestwinery.com/shop
Goose Ridge Estate Winery and Vineyards Curbside or shipping (425) 488-0200
Icon Cellars Curbside and delivery (425)223-7300 https://www.iconcellars.com
Curbside and delivery 503-864-4553 https://www.lachinivineyards.com
Matthews Winery Curbside and delivery 425-487-9810
Pomum Cellars Curbside (425) 877-9530 https://pomumcellars.com
Ryan Patrick Wines Curbside 509-888-2236 https://ryanpatrickwines.com
Woodhouse Wine Estates Curbside or shipping 425-527-0608
20 Corners Brewing Co.Pickup and delivery (425)-305-6620
Building Insurance Coverages There are six variations of insurance coverages when it comes to insuring your building whether it be your personal residence or investment properties and they all have vastly different claims payouts. We have written this article in … Read More