“The value of land may be determined by how it can be used. For example, it may contain valuable resources such as water, minerals, tillable soil, timber, or wildlife. There also may be commercial value in the natural attraction of lands such as caves, lakes, or trails. Land value can be reduced by erosion, flood, earthquake, fire or regulation.”
— Marshall Wilson Reavis III
Owning real estate is an excellent investment; as the owner of multiple commercial properties, I can attest cash flow favorable properties are a great way to add to your wealth. Additionally, as an insurer of commercial property in the Denver Metropolitan area, we have helped many clients protect their asses. So, Pat, I’d like to buy a “T.”
Property insurance is on the increase across the country. It is no secret that the costs of building materials spiked during the pandemic. We work with clients who own commercial property in Denver and surrounding areas. We make sure to insure to value but give our clients a chance to decide how much they want to risk.
Most insurance agents use a form known as replacement cost; it’s the default approach 90% of insurance agents use to insure the commercial property. But did you know there are other options? Clients of our firm are surprised to learn they do not have to insure at replacement cost. Instead, they can choose other options.
Actual Cash Value is an option when insuring commercial property. ACV is defined as replacement cost minus depreciation. At the time of loss, the carrier will factor in deprecation based on the property’s age. Some of our clients in the Denver market have chosen to help keep their insurance line item lower, taking on more of the risk for a reduced premium.
Another option is functional replacement cost. For example, let’s say your business is located in a building that you would never replace in the event of a total loss. But you want protection at a time of a partial loss. A partial loss would be settled using functionally replaced materials. For example, you might use a lower-cost material instead of an old oak beam.
When owning commercial property in the Denver area, it is essential to find an insurance professional that understands all your options. Commercial property ownership is a great way to build wealth and treasure. But when a claim occurs, you want to make sure you have a professional that understands your needs, wants, and choices. If you are not happy with your current agent, let’s have a conversation.
With love and peace – Anson Ross Thompson
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