Understanding Basics of Commercial Property Insurance-Part I(1.5 Credit Hour) TDI Course No.

 

Chapter 2:

2.1    Why should managers, agents, adjusters understand the basic concepts of Commercial Property Insurance?

• To protect customers from some of the risk that the property their company owns could be lost, stolen or damaged.
• To help customers understand that if they don’t own the building where they do business, they'll only need to cover the building’s contents. The basic commercial property insurance policy protects their investment in fixtures, furniture, office equipment, inventory and the supplies that they store either at their business location or off-site.
• To inform customers that, commercial property insurance premiums will vary depending on whether they cover replacement cost or actual cash value (ACV).
• To identify for the customer the appropriate policy to meet their needs: 1. A replacement-cost policy ensures that your settlement is based on what you will have to spend to replace the items at current market prices. 2. An actual cash value policy reimburses you for the property’s depreciated value.
• To help customers understand that replacement-cost small-business property insurance policies have higher premiums, but because they allow the customer to replace all lost or damaged property with new items, such policies can help your business quickly recover from a loss.
• To help customers who are leasing any equipment, understand that their leaseholder may insist that the property be insured for its replacement value. That’s why most property insurance coverage is written on a replacement-value basis.
• If the customer’s business owns its own equipment, and the customer could easily replace lost equipment with comparable used goods for the depreciated market value, an ACV policy’s lower premium may be more cost-effective.
• To help the customer understand that you can help them secure the best commercial property insurance for their small business’s budget and needs – whatever those needs may be.

2.2   What happens when a manager, agent, adjuster doesn’t clearly understand the Basic Concepts of Commercial Property Insurance?

• Won’t be able to clearly explain commercial property insurance to a customer
• Inexperienced staff could be poorly trained
• Risk lower revenue and profit
• Risk losing customers to competitors who do keep up
• Risk losing best talent
• Risk falling further behind due to poorly trained staff