How much do I insure my property for??

Yesterday, a customer called wanting to insure a building for 860k, which is what she paid for it.   Naturally, I ask questions like:

How big is it?  Tenants?  Age?  Etc.....all very common insurance questions.

However, I discovered that the building has a RECONSTRUCTION COST or VALUE of about 400k, which is about 100 per square foot.  (Even that is a little high, as insurance value tends to be around the 80/sqft range to obtain REPLACEMENT Cost coverage)  Anything lower than that, gets Actual Cash Value, and depreciation is taken in to consideration when claim time comes, along with deductible.  (There are a myriad of other factors here, so please call me for more information)

So, this means we have an issue.  Typically, people are more inclined to underinsure their buildings than to over insure their buildings, due to cost.....Obviously, more insured value = more premium.

She admitted to over paying due to location.  However, as an insurance agent, I can't insure "land" as part of a building to bump up the insured value.

So there are some things to consider when insuring your property.  Reconstruction costs being most important, then use, etc.

Some important takeaways to consider.  Market value DOES NOT EQUAL insurance value!  Just because something sells for X, doesn't mean it's worth X.  This typically applies to all things.

YOU CAN NOT INSURE LAND AS PART OF A BUILDING!

You can insure land for General Liability in regards to a lease, vacancy, etc....

As always, stay protected my friends, and please think of me for your commercial insurance needs!