Here’s the quiet problem in commercial property insurance: construction costs have climbed dramatically over the past several years, and most building limits haven’t kept pace. The result is a main street full of businesses insured for numbers that couldn’t rebuild their buildings — and many owners won’t find out until the worst possible moment.
Your building limit should reflect what it costs to rebuild — materials, labor, debris removal, and today’s codes — not what you paid, what it would sell for, or what the county assesses. These numbers routinely differ by six figures in both directions. Older buildings especially: ordinance or law coverage (the cost of rebuilding to current code — sprinklers, accessibility, electrical) is limited or excluded on standard forms, and older metro buildings never rebuild to old code.
Most commercial property policies carry a coinsurance clause — typically 80% or 90% — requiring you to insure at least that share of full value. Fall short and the penalty applies to EVERY claim, not just total losses: a building insured at 60% of value takes a proportional haircut on the hail claim and the pipe burst too. This is the mechanism that turns ‘a little underinsured’ into ‘shocked at settlement.’
Questions about your coverage? I’ve spent more than 46 years helping Kansas City area businesses and families get insurance right. As an independent agent with access to over 50 markets, I work for you — not an insurance company. Call or text Jay Stoetzer at 816-384-7738, or email jay@insure247.com for a no-pressure review.