Replacement value of CRE twice more than what I paid?

[Igor Chudov]

A little less than a year ago, I bought a 10,000 square foot commercial warehouse near Chicago, situated on about one acre of land.

I bought it for $X and am using it to run my business, which is buying and selling used industrial equipment.

I bought it for "cash" (no loan) and, therefore, did not need insurance at the time.

However, when I went on to insure the building a few months later, the insurance company told me that they calculated the "replacement value" as a little over $2X and would not insure the building for less than that.

I am not sure how to think about this; is that good news in that the likely value of this property is more than I paid, or, perhaps, the insurance company was trying to pull a fast one on me and overcharge me for premiums? They told me that their underwriter stopped by and looked at the building and took pictures, I personally never saw him or her.

Thanks!

[Joe Bertolino]

Steve, Most carriers (at least my top 4 property carriers) will blanket Building Ordinance or Law Coverages A,B and C into the building limit and the load is only 4-7% of the premium. It makes the claims process much easier.