Total Insurable Values (TIV) 101
Total insurable values is a property insurance term referring to the sum of the full replacement cost value of the insured’s covered property, business income values, and any other insured property. Total insurable values are typically used in property insurance policies for businesses and other organizations that insure 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 increases in expenses that result from the property damage.
Why Is Having Accurate Total Insurable Values (TIV) Important?
Total insurable values (TIV) are calculated by adding together the total property, equipment, inventory, tools, etc. at each location and combining it with the final number calculated on a fully completed business income worksheet. A business income worksheet is a form that is provided by your insurance broker that is used to estimate an organization’s annual business income for the upcoming 12-month period, for purposes of selecting a business income limit of insurance. The selected percentage, or multiple, of the organization’s estimated annual business income for the upcoming 12-month period, should be based on how long it would take to replace all damaged property and resume operations in the event of a worst-case loss. For some organizations, this period could exceed 12 months. Most insurers require a completed business income worksheet as a condition of activating the business income agreed value coverage option.
The total insurable value (TIV) is an important number for all commercial property policies because it is typically the number that is applied against the rate to determine the premium. Ex. [$1,000,000 (TIV) x $0.4 (Commercial Property Insurance Rate per $100 of TIV)]/100 = $4,000 annual premium per year.
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