When establishing the value of your company's real property, you might be inclined to insure it for the market value. However, insurance policies generally insure on a replacement cost value basis, not the market value. This is because we do not insure the land, we only insure the structures and personal property.

Replacement cost value basis is calculated using the exterior square footage of the property multiplied by current square footage construction costs. Additional amounts, generally 15% of the Sum Insured, are also included for surveyors’ and architects’ fees and debris removal costs in the event of damage.

It is wise to consider reviewing your property values each year as your building and assets may change.