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Crystal Granite

Most insurance on buildings is sold in bundled or packaged form. Multiple coverages are contained in one policy. Examples of the types of coverage frequently contained within the policy include:

-Fire damage to building
-Fire damage to contents
-Other damage to building or contents
-Personal liability
-Glass
-Machinery
-Boiler
-Loss of rental income

CLAUSE FOR COINSURANCE
Sometimes referred to as the average clause, a coinsurance clause is usually written at 80% of the value of the property being insured. It also can be written at 90% or 100%. The insurance company will compensate the insured at the same proportion as the percentage of insurance carried compared to the value of the damaged property. Total liability on the part of the insurance company never exceeds the amount of insurance. The following chart illustrates how a coinsurance clause is applied in the case of a loss:

Building Value.........$200,000
Loss.........................$30,000

Figure One (proper coverage)
80% of value...................................$160,000
Insurance in force...........................$160,000
Loss.................................................$30,000
Amount covered by insurance.......$30,000

Figure Two (too little coverage)
40% of value = ½ of required amount.........$80,000
Loss................................................................$30,000
Amount covered by insurance (50%)...........$15,000

When applying the formula illustrated above, it must be remembered that the company does not pay an amount greater than the amount of the loss.

INSURANCE VALUATION

The key component in a fire insurance policy is the dollar amount for which the property is valued. Frequently referred to as actual value, this dollar figure determines the amount of insurance required and the amount of loss that the owner may expect to collect. In comparing value estimates and adjusting for losses, insurance companies normally accept replacement cost minus depreciation as actual value.

However, the owner should take great caution in the establishment of actual value, especially if the building is extraordinary as regards construction or usage, or if it contains unusual characteristics that would cause the structure to be of greater than average value. In these cases, a written appraisal should be sought by the owner and then compared to the insurance company's valuation. Any discrepancy should be resolved prior to incurring a loss. This simple step may well serve to prevent costly and time-consuming litigation in the event that a loss does occur.

ADDITIONAL COVERAGES

Beyond the fire insurance itself, there are a variety of additional coverages available. Many policies cover these types of losses, but it is best to check the individual policy. If specific coverage is not included, riders can be added to cover a wide variety of perils that could cause loss to the owner. Things such as damage by wind storm, hail, riots, and smoke should be included in the policy.

The cost for additional coverage is normally subject to a deductible, which significantly reduces the premiums. Normally, the larger the deductible (the amount the owner of the property has to invest prior to insurance coverage taking effect), the lower the premium for extended coverage.

INSURANCE FOR LOSS OF RENTAL INCOME

If properly provides rental income to the owner, insurance coverage can be obtained that will reimburse the owner for loss. Coverage may be for loss due to fire only, or can be written to cover other perils.

REPORTING A LOSS

At the time a loss happens, the property owner must notify the insurance company. He or she must also take steps to protect the property from additional damage. If there are holes in the walls or roof or broken windows, they should be repaired immediately to prevent additional damage. The insurance company, under normal circumstances, will not be liable for additional damage that occurs due to the owner not taking appropriate steps to protect the property.

After the insurance company has been notified and the owner has taken any steps necessary to protect the premises from additional damage, the owner must submit estimates covering the cost of repairs.

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