The owners of a new company found a building on the market for an affordable price, so they bought it. Built in the 1940s to manufacture aircraft for the war effort, the metal structure had a large open space.
The company occupying this space was in the software development business and the building was much larger than it needed, but the price made it seem like a sensible move. However, the owners got a surprise from their insurance agent about property coverage.
Most commercial insurance policies will cover the cost of replacing a building and its contents exactly as everything was before the loss. But the cost of reconstructing this old building to its original state was much higher than both its purchase price and that of other similar properties due to its unique architecture and out-of-production artisan materials used in its construction.
The company did not need that much insurance, and paying the higher premium for it would have been wasteful, so the owners asked the agent for alternatives. What if, they asked, we don’t rebuild our building as it was and go for a less expensive replacement? Do You Need Full Replacement Coverage for Your Commercial Property