Disaster Strikes, will my Insurance Cover Inflation Cost?
Disaster Strikes, will my Insurance Cover Inflation Cost to rebuild?
Inflation cost is described as the depreciation of the dollar but there are other Inflation Costs when rebuilding a business. Hurricane Katrina drove up lumber prices that had already risen 3 times in the prior 7 years. China is draining our lumber surplus further driving up the cost to rebuild. A noticeable jump in lumber and building supplies were experienced after 9/11. IF YOUR BUSINESS BUILDING IS INSURED FOR THE SAME AS IT WAS two years ago, YOU CAN’T AFFORD TO REBUILD IF DISASTER STRIKES! The real construction cost to rebuild can be appraised and your business insured properly if you act now.
Real construction cost is a combination of scientific industry approaches that will insure that you receive a valuation that appropriately covers your cost to demolish, rebuild and furnish your present business without getting additional loans or quitting your business.
Your business building needs to be appraised by an accredited appraiser that is experienced in commercial business building construction.
BEWARE:
- Don’t be lured by a simple square footage equation of rebuilding cost.
- Don’t use a real estate appraiser who wants to plug the question into their software.
This is a complex appraisal that will require your blueprints or an onsite appraisal to show your insurance company that a real cost appraisal has been certified by an accredited appraiser. Some think replacement cost insurance is the answer, it might have been 8 years ago. Some think the demolition cost is covered by the insurance, it is NOT! Some say fine if there isn’t enough money to rebuild, I will just take the insurance and retire… the real problem is the fine print… if you are underinsured the insurance company CAN give you a cash value of only a portion of the insured amount. Case in point: Harold P. had his business build insured for $378,000, equipment insured for $100,000. When disaster struck, Harold discover that real construction cost were $750,000 and the equipment would be $198,000. Harold was $470,000 short to rebuild his business so he decided to quit and retire. The insurance company arbitrarily decided that since Harold was not going to rebuild, and that he was 50% underinsured, that they would give a cash value of only 50% of the insurance. Harold received a check for only $239,000.
MOST BUSINESS BUILDINGS IN THE US HAVE NOT BEEN PROPERLY INSURED FOR YEARS. Call Paul Fussell Valuations for a Real Construction Cost Appraisal. 29 years experience as a Commercial General Contractor, Senior Professional Appraiser and 2008 – 2009 USPAP approved.
