Owners and managers of buildings with historic significance, fine detailing and unique features have the desire to replace damaged property with like-kind and quality materials and detailed workmanship. If you have a client or prospect with a historic building, it’s vital to educate them on the importance of having historic or guaranteed historic replacement cost coverage so they are not left with significant coverage gaps in the event of a loss.
Please share our short animated video on replacement cost coverage with your clients.
A BRIEF COMPARISON OF REPLACEMENT COST COVERAGE
Standard replacement cost—an available option in a traditional property policy, this feature pays for the cost to replace materials damaged or destroyed by a covered event — using readily available commercial off-the-shelf contractor-grade materials, workers, and today’s standard building techniques. Typically this policy would not cover the cost of skilled specialists and artisans. Basically, the standard property policy that protects the modern office building down the street would not fully protect the historic museum with the exquisite millwork two doors away. The insured can lose the very features that made the property attractive to visitors or tenants.
Historic replacement cost—covers the cost to repair or replace with the same materials, artisan-quality workmanship and architectural features. If they are not reasonably available, the historic replacement cost will pay for the cost to repair or replace – up to policy limits – with reasonably available materials, workmanship and architectural features that most closely resemble those in place before an occurrence of the loss. Keep in mind: the older or more special the property, the harder it is to come by “reasonably available.” Historic replacement cost allows for more than a restoration of a building’s function. Its main goal is to maintain the original historic integrity of the building.
Guaranteed historic replacement cost—pays for an amount equal to the replacement cost of the building as close to original as possible using artisan-quality workmanship, regardless of the limit of insurance purchased. This is the “peace of mind” choice because insureds aren’t bound by time and money limits. They can pay for the time needed to scour for period-correct materials and craftsmen and the additional time for painstaking renovations recertification, and recovery of tax benefits.