Shop Insurance

[SickSpeedMonte]

I have a 74 x 30 x 10 building. It's a 30 x 50 pole barn with a stick-built addition (not my doing), finished interior, insulated walls and ceiling, corrugated metal inside and out. Has a concrete slab, 70A service, and two Mitsubishi heat pumps. I'm in northeastern MD. I have a business that I operate out of this building, so it is on a separate policy from my house. My broker is telling me that his reconstruction estimator came up with $178k replacement cost. That seems awfully high to me. It estimated $32k just for the slab.

I had another building built in 2021 for clean storage. This one is covered under my home policy's accessory buildings. It's 30 x 60 x 16. Same post-frame construction, floor thickness, wall insulation, finish materials inside and out, number of windows and man doors. It has one similar roll up door as the business shop, plus one 14 x 14 door. It cost me about $70k from groundwork to turnkey. I hired an Amish builder. The concrete work was $4,500, which I know is a good deal.

I presented this info to my broker, and he replied that the insurance carrier has a coinsurance clause. If I don't insure the business shop for at least 80% of "fair market value", the carrier will reduce the payout on any potential claims proportionally to undervalued coverage amount. So if they think it's worth 180k and I insure it for 90k, they'll only pay out half of any claim (or maybe it would be 90/(180 * 80%), so 62%). Also, if I insure it for the 180k and have a total loss, they'll only pay out what it actually costs to rebuild.

The difference in premiums is almost double, an increase of $350.

Does anyone have experience with this? To me, it seems like my only option is to **** it up, pay the premiums, and hope I could upgrade something if I ever have to make a claim.

 

[mike93lx]

Have you shopped the policies around?

 

[jack stand]

Definitely go "shopping" !
Make sure one of your stops is with an independent agent.
And be prepared to be able to "sweeten" the deal with some or all of your other insurance needs.
If you end up showing them your existing policies, black out the premiums although for initial inquiries I prefer to just list the various coverages and deductibles so you're "apples to apples".

 

[Youngandfree]

Comparing your "great deal prices" 2 years ago to current day outrageous inflated prices is apples to oranges.

 

[Rst277]

I have a 74 x 30 x 10 building. It's a 30 x 50 pole barn with a stick-built addition (not my doing), finished interior, insulated walls and ceiling, corrugated metal inside and out. Has a concrete slab, 70A service, and two Mitsubishi heat pumps. I'm in northeastern MD. I have a business that I operate out of this building, so it is on a separate policy from my house. My broker is telling me that his reconstruction estimator came up with $178k replacement cost. That seems awfully high to me. It estimated $32k just for the slab.

I had another building built in 2021 for clean storage. This one is covered under my home policy's accessory buildings. It's 30 x 60 x 16. Same post-frame construction, floor thickness, wall insulation, finish materials inside and out, number of windows and man doors. It has one similar roll up door as the business shop, plus one 14 x 14 door. It cost me about $70k from groundwork to turnkey. I hired an Amish builder. The concrete work was $4,500, which I know is a good deal.

I presented this info to my broker, and he replied that the insurance carrier has a coinsurance clause. If I don't insure the business shop for at least 80% of "fair market value", the carrier will reduce the payout on any potential claims proportionally to undervalued coverage amount. So if they think it's worth 180k and I insure it for 90k, they'll only pay out half of any claim (or maybe it would be 90/(180 * 80%), so 62%). Also, if I insure it for the 180k and have a total loss, they'll only pay out what it actually costs to rebuild.

The difference in premiums is almost double, an increase of $350.

Does anyone have experience with this? To me, it seems like my only option is to **** it up, pay the premiums, and hope I could upgrade something if I ever have to make a claim.

$350 is peanuts. If you have a fire and they give you $90,000 but it costs you $90,000 extra to rebuild, you'll be kicking yourself. You run a business, insurance is a write off, charge one high roller client a bit extra or something, problem solved.

 

[tarmy]

$350 is peanuts. If you have a fire and they give you $90,000 but it costs you $90,000 extra to rebuild, you'll be kicking yourself. You run a business, insurance is a write off, charge one high roller client a bit extra or something, problem solved.

This. I pay more than 10 times that much for a garage!

Out here the fire coverage is wildly expensive and basic other coverages combine to over 4K just for my outbuilding.

 

[jblnut]

Shop around if you’d like otherwise just pay it. In the last 2yrs my insurance has gone up $12k on everything or roughly 40%. I have decent replacement coverage on everything as the barns and sheds are all revenue generating and/or filled with expensive to replace things that may or may not be mine depending on who’s working where and lots of other things.

Everything has gone nuts lately and I wouldn’t be shocked if that insurance estimator takes numbers from a very broad region and lumps the average cost all together to spit out its values. You can of course customize anything you see fit but they’ll put the screws to you as far as reducing coverages just because they can.

Insurance companies are on the verge of being legal thieves lol. A necessary evil though.

 

[Sturgeon]

A friend bought a acreage that had a very old pole building on it. He decided to plywood it in, all but the front for future garage doors. Even trusses were in sad shape, well it all blew down. What a mess, he claims insurance company gave him $65,000 for it. Go figure, are insurance company wasn't much help with coming up with a replacment cost either. I would have thought they would have appraisers?

 

[AC-WC]

Just got done with mom's replacement 30X40X10 barn last fall. Even with me doing the electric it was around 19,500. Turned it in to insurance for coverage and they have it covered for about 46,000. Knowing I got a heck of a deal with the amish I was more than happy to have it covered for that. If you ever go what we went through it is dirt cheap.

 

[Coach James]

I own a commercial building, footprint is 15,000 sq ft with 18,000 sq ft heated space. Every three years, our insurance carrier requires a estimate of rebuilding cost to determine the amount of casualty insurance we have to carry to be 80% insured. Same deal, if we are insured for less than 80% any payout would be reduced proportional to the amount of underinsurance.

 

[930dreamer]

I wonder if i can get a new policy on my shop after the wild fire went through? No damage to my shop.

 

[mike93lx]

I wonder if i can get a new policy on my shop after the wild fire went through? No damage to my shop.

I would be surprised if you cant. Having an event doesn't make it uninsurable

 

[ericm]

We saw some insurers stop renewing policies after a big fire in our area. Many more jacked up prices. So far we're ok but our insurer has stopped writing new policies.

 

[930dreamer]

Rumor is the local utility company might be responsible for the Texas fire.

 

[dcg9381]

I have a 74 x 30 x 10 building. It's a 30 x 50 pole barn with a stick-built addition (not my doing), finished interior, insulated walls and ceiling, corrugated metal inside and out. Has a concrete slab, 70A service, and two Mitsubishi heat pumps. I'm in northeastern MD. I have a business that I operate out of this building, so it is on a separate policy from my house. My broker is telling me that his reconstruction estimator came up with $178k replacement cost. That seems awfully high to me. It estimated $32k just for the slab.

When did you build it? I think $178k is probably very reasonable for turn-key of that size with a finished interior, electrical, insulation, and 2 heat pumps. The only difference I could see is that you can't burn down a slab, so reduce those costs. But I can easily see $178k being in the ballpark.

 

[tarmy]

I wonder if i can get a new policy on my shop after the wild fire went through? No damage to my shop.

After the Dixie fire basically burnt everything down for over 30 miles in every direction from where my place is…my insurance went…UP!

I had an insurance inspection before the fire because of some of the other big fires. My insurance had canceled all their policies so my only source was the state. My insurance went up over 10x and was less coverage. They made me remove trees and have a large defensible space which I complied with. The Dixie fire went through here and they decided that since there is nothing left to burn…they still needed to raise my rates 50% more.

Good luck with you insurance but my experience is not good.

 

[dcg9381]

Good luck with you insurance but my experience is not good.

USAA was offering to come out and inspect my place to suggest fire mitigation strategies. I felt they were asking for permission to come out to document the number of cedar trees we have. 90% of my property is basically native grass/trees.. Last thing I want is the insurance company snooping around and documenting a reason to deny coverage.

Our biggest risk is probably a composite roof. The shop is of course all metal and the house is 100% masonry.

I am not willing to clear all the trees. It would make our place a lot more visible and impact privacy.

No municipal water supply out here.. We're definitely high risk of wildfire.

 

[nadogail]

Everybody loves Cheap Insurance until they have to use it.

 

[930dreamer]

My shop and property are in a different location from my primary residence. I'm sure I won't like what they say!

 

[Jagmandave]

USAA was offering to come out and inspect my place to suggest fire mitigation strategies. I felt they were asking for permission to come out to document the number of cedar trees we have. 90% of my property is basically native grass/trees.. Last thing I want is the insurance company snooping around and documenting a reason to deny coverage.

Our biggest risk is probably a composite roof. The shop is of course all metal and the house is 100% masonry.

I am not willing to clear all the trees. It would make our place a lot more visible and impact privacy.

No municipal water supply out here.. We're definitely high risk of wildfire.

They already know how many trees you have and where they are with respect to your house and buildings......Google earth has seen to that. I'm sure they would recommend clear cutting as cedar trees will go up fast in a forest fire......

Local roofing contractors don't even bother to go up on a roof anymore to do an estimate to replace it, they just go on Google and get the style, shape and number of peaks and valleys off of that.

 

[egdede]

After the Dixie fire basically burnt everything down for over 30 miles in every direction from where my place is…my insurance went…UP!

I had an insurance inspection before the fire because of some of the other big fires. My insurance had canceled all their policies so my only source was the state. My insurance went up over 10x and was less coverage. They made me remove trees and have a large defensible space which I complied with. The Dixie fire went through here and they decided that since there is nothing left to burn…they still needed to raise my rates 50% more.

Good luck with you insurance but my experience is not good.

For 2 months before our policy expired, my wife and were jumping through hoops to get renewed 10k worth of hoops. Then 2 days before the policy expired they said no renewals in CA : ( We live in a wild fire zone, but it's a city block in the foot hills above Los Angeles. We had to go to the state pool, and our rate doubled with less coverage. looks like we can get back on a regular policy for less than the pool next year. Oh yeah, the state made us pay in full....

 

[930dreamer]

I did call USAA, yes my homeowners covers the shop but when it came down to numbers they were pretty vague.

 

[slodat]

I’ve had nothing but bad experiences with USSA property insurance. I’ll never use them for anything again. Good buddy of mine has had nothing but good.

OP- My business insurance is not cheap at all. $350 is less than 1/20th of my annual policy. If you’re upset over $350, you definitely don’t want to suffer a loss. I had tenants cause a fire in a rental property a few years ago. I was really happy I had good insurance. Based on that alone, I’m happy to pay all my insurance premiums.

 

[Jerrysends]

Insurance is not bad in the PNW, as long as you didn't buy property with flood or wildfire risk.

 

[frankd]

I presented this info to my broker, and he replied that the insurance carrier has a coinsurance clause. If I don't insure the business shop for at least 80% of "fair market value", the carrier will reduce the payout on any potential claims proportionally to undervalued coverage amount. So if they think it's worth 180k and I insure it for 90k, they'll only pay out half of any claim (or maybe it would be 90/(180 * 80%), so 62%). Also, if I insure it for the 180k and have a total loss, they'll only pay out what it actually costs to rebuild.

It shouldn't be the "fair market value". Valuations are typically based on replacement cost. Not all policies will have coinsurance though...so you might be able to find a policy that doesn't have a coinsurance clause. But with those types of policies, the carrier will DEFINITELY make sure that the building is adequately insured.
When it comes to coinsurance, the higher the percentage, the worse it is for the insured. 80% coinsurance means that you need to insure the building for at least 80% of the replacement cost. In the event of a loss, the insurance company will look at the amount of the loss, vs the replacement cost of the building. The further you are below that 80%, the higher the penalty for underinsuring.

As others have stated, shop around. Try all the big names, and also find an insurance broker in your area that represents multiple carriers.

 

[930dreamer]

There's a local Farm Bureau by my shop, their probably flooded with claims after the fire but I'll give them a call.

I called Farm Bureau Insurance in Stinnett, they have a moratorium on policies at this time. I'm on the call back list if/when it's lifted.

 

[dcg9381]

I did call USAA, yes my homeowners covers the shop but when it came down to numbers they were pretty vague.

They cover mine as an "accessory building". You can have them adjust the value (within certain limits). Call them back and specifically ask about coverage for the shop. I know the insured value of mine.

 

[930dreamer]

They cover mine as an "accessory building". You can have them adjust the value (within certain limits). Call them back and specifically ask about coverage for the shop. I know the insured value of mine.

I have no idea how to value the contents, I'm sure replacement value on a huge industrial press and a 60" wide blast cabinet would be $$$.

 

[dcg9381]

I have no idea how to value the contents, I'm sure replacement value on a huge industrial press and a 60" wide blast cabinet would be $$$.

I'd ask USAA, but I think the contents of an "accessory building" are part of the contents of the home... USAA lets you set specific values for that too.

My concern is largely a tornado or something that comes through and wipes the shop out. IE, what would it cost to rebuild today, assuming I've got a working foundation.

 

[finn]

I'd ask USAA, but I think the contents of an "accessory building" are part of the contents of the home... USAA lets you set specific values for that too.

My concern is largely a tornado or something that comes through and wipes the shop out. IE, what would it cost to rebuild today, assuming I've got a working foundation.

That’s how my State Farm policy works. The shop is a mile from the house (half mile as the crow flies) but the agent was able to get it covered as an accessorie building. The contents are covered at a fixed percentage of the building unless you pay for a rider to increase that coverage.

That means I should , but haven’t yet, declare a value on the tools, welders, lifts, compressors, media blast cabinets, etc or I’ll be starting a “woe is me” or “my insurance screwed me” post in the event of an event. Per discussion with the agent when I bought the building and it was still empty, the riders are usually sold to people that want coverage of antiques, tools, gun collections, etc, and tools would fit in .

We’ll see how things go now that my long time agent has retired.

 

[Walkers]

Comparing your "great deal prices" 2 years ago to current day outrageous inflated prices is apples to oranges.

No, it is apples to watermelons!

 

[gillrich]

What did you actually choose? We are looking for some new insurance options as well, so would like to know what factors influenced your decision. We've been researching different providers and even checked carefully through one call insurance reviews. They seem promising, but hearing about your experience would definitely help us in making our decision.

 

[nadogail]

The policy that covers the house, and the detached garage that is my shop, is written in my son’s name; he is the resident of the house and rents from me. My shop equipment is covered as the contents, if I insured the building I would only be covered for the loss of the structure. My agent told me that if my son insured the property, I can claim the loss of the contents, hopefully I won’t have to.