Is Your Property’s Full Value Covered?
If a fire, flood or windstorm damages your commercial property, your business will be interrupted. Once you’ve confirmed all employees are safe, you’ll reach for your business insurance policy. Knowing what common insurance terms mean – such as Total Insurable Value – before a loss happens can help ensure your business is covered for its full value.
What Does TIV Mean?
Total Insurable Value (TIV) is a property insurance term that refers to the sum of the full value of the insured’s covered property, business income values and any other insured property.1 Typically found in property insurance policies for businesses and other organizations, TIV insures against damage to an organization’s buildings, contents to a covered cause of loss, such as a fire, flood, windstorm, etc. A commercial property policy may also cover loss of income or increase in expenses that result from the property damage.
How To Calculate Your Total Insurable Value (TIV)
Add together the total value of all property, equipment, inventory, tools, etc. at each location. Your insurance broker will also provide you with a business income worksheet. This form is used to estimate an organization’s annual business income for the upcoming 12-month period. Your business income limit of insurance adds together the sum total of all of these amounts.
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The selected percentage (or multiple) of your organization’s estimated annual business income for the next 12 months is based on how long it will take to replace all damaged property and resume operations in the event of a worst-case loss. For some organizations, this period may be more than 12 months. Most insurers require a completed business income worksheet in order to activate the business income agreed value coverage option.
Why Is Having An Accurate TIV Important?
Your full value or TIV is an important number for all commercial property policies because it is typically the number that’s applied against the rate to determine your premium. For example, a $1,000,000 TIV x $0.4 (Commercial Property Insurance Rate per $100 of TIV) divided by 100 equals a $4,000 annual premium.
An ALIGNED Advocate can provide expert guidance about insurance and risk management best practices for your organization. Talk to one of our advocates today about how we can help you secure the best products, services and insurance solutions for your business.
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Source 1 IMRI.com