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Why Underinsurance Is So Common Right Now

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Underinsurance has become one of the biggest risks facing business owners—and many don’t realize it until after a loss.

Rising Costs Are the Biggest Culprit

Construction materials, labor, and equipment costs have increased significantly. If your property limits haven’t been reviewed recently, your coverage may no longer reflect today’s replacement costs.

The Hidden Risk of Coinsurance Penalties

Many commercial property policies include a coinsurance clause. If your building or contents are underinsured:

  • Claim payments may be reduced
  • Even partial losses may not be paid in full

This can leave businesses paying out-of-pocket during an already stressful time.

Areas Often Overlooked

Businesses are commonly underinsured when it comes to:

  • Building replacement values
  • Business personal property
  • Equipment and tools
  • Tenant improvements
  • Business income coverage

How Often Should You Review Limits?

At minimum:

  • Annually
  • After renovations or expansions
  • When equipment is added or replaced
  • When lease terms change

A quick review can prevent major financial consequences down the road.