Commercial property insurance can be essential for financially protecting your business assets from unexpected events like fire, theft or severe weather. Two key elements of this insurance are policy limits and deductibles.

What Are Policy Limits?

Policy limits specify the highest amount an insurer will cover for a claim. For example, if your policy has a $1 million limit, the insurer may pay only up to that amount for a claim. Choosing limits that reflect your property’s value and potential risks is crucial. In Florida, where businesses face unique challenges like hurricanes, higher limits might be necessary for adequate coverage.

What Are Deductibles?

Deductibles are the amounts you pay out-of-pocket before the insurance kicks in. A higher deductible usually means lower premiums, but it also means more out-of-pocket expenses in the event of a claim. Balancing your deductible with your financial ability to cover initial losses is essential. Considering the frequency of severe weather, a manageable deductible is vital for Florida businesses.

When choosing coverage levels, assess your business’s specific needs. Consider factors like property value, location and potential risks. Your insurance broker can help tailor a policy that fits your business’s unique requirements.

Replacement Cost vs. Actual Cash Value

Understanding replacement cost and actual cash value is essential. Replacement cost coverage may reimburse you for the cost of replacing damaged property with new items of comparable kind and quality without accounting for depreciation. This can help restore your business to its pre-loss condition.

Actual cash value (ACV), on the other hand, pays the depreciated value of the property. While ACV policies are generally cheaper, they may not provide sufficient funds to replace damaged items fully.

For Florida businesses, opting for replacement cost coverage is often more beneficial, especially given the high risk of property damage from hurricanes and other severe weather events. This can help you rebuild and recover without significant financial strain.

Learn More

For commercial property insurance near you, contact Tanenbaum Harber Insurance Group.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.