What Does Total Insurable Value Mean For A Business In Canada?
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If you are planning out your fiscal year, “What does total insurable value mean for a business in Canada?” might be something that you are thinking about. Total insurable value is a property insurance term that refers 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 value – aka TIV – is typically used in a property insurance policy for business and insures against damage to an organization’s buildings, contents to a covered cause of loss, such as a fire, flood, windstorm, etc. You may be expanding, acquiring or changing business focus and that’s why knowing “What does total insurable value mean for a business in Canada?” can help you advance a new or evolving strategy.
What Does Total Insurable Value Mean For A Business In Canada? Here’s Why It Is Important.
Your total insurable value is calculated by adding together the total property, equipment, inventory, tools, etc. at each location and combining it with a 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 and is used to estimate an organization’s annual business income for the next 12 months. This estimate is used to select a business income limit of insurance. The selected percentage, or multiple, of your organization’s estimated annual business income for the next 12 months 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.
The recovery period for some organizations may exceed 12 months. Most insurers will specifically require a completed business income worksheet as a condition of activating the business income agreed value coverage option.
A 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.
We can help you learn more about how to accurately calculate your organization’s total insurable value.
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