How to Calculate Commercial Property Insurance Payments

Your business has a commercial insurance policy for a reason. You have invested a lot of time and money into your business and want to make sure that your investment is protected in the event of a fire or other common cause of loss. If you must ever file a commercial property insurance claim, you should be able to calculate the approximate settlement value to expect from the insurer. Though the math is easy, there is often confusion as to how to apply the policy deductible and the maximum amount of money you are entitled to.

Instructions
Read your commercial property insurance policy to determine the maximum benefit and the appropriate deductible. Example: Your inventory was burned in a fire. Your inventory coverage maximum benefit is $100,000. Your deductible is $500.
Determine the value of your damaged property. Methods of doing this will vary by the type of property that was damaged.
Subtract your deductible from the total value of the damaged property. Using the above example, if the value minus deductible is less than $100,000, you should receive that amount. If the value minus deductible is greater than $100,000, you will receive only the maximum policy benefit of $100,000.

Tips & Warnings
• Remember that the deductible applies to the property value, not the policy limit. If the total damage in the above example was $100,499, then the value minus deductible would be $99,999, and you should receive that entire amount. If the deductible were applied to the policy limit, then the maximum benefit you would receive under any circumstances would be $99,500. This is not legal, according to the lawyers at the Merlin law group.
• Your insurance company may have methods of reducing costs that are not available to you. You may calculate your damaged property value at $50,000, but the insurer might be able to replace the same property for only $45,000, thus reducing your expected benefit. You are entitled to a settlement equal to the least expensive method of accurately valuing your property. Therefore, your settlement calculation may be different than the insurance company's.