The Hidden Risks of Underinsuring Your Commercial Property

If you own or lease a building, warehouse, office, or shop for your contracting business in New Jersey, you likely already have commercial property insurance. But here’s the hard truth: many contractors are dangerously underinsured—especially when it comes to properly valuing their property and equipment.

Underinsuring your building or contents—known as not insuring to value—can lead to disastrous financial consequences. If you suffer a loss like a fire, theft, or storm damage and your policy limit doesn’t reflect the true replacement cost of your property, you could be stuck paying thousands out of pocket. Many policies include a coinsurance clause, meaning if you're underinsured, the insurance company may only pay a portion of your claim—even on partial losses.

That’s why it’s crucial to work with an agent who understands the real cost of rebuilding or replacing your property and equipment—not just what it's worth on paper. Construction costs in NJ have risen significantly in recent years, and many property policies haven’t kept up. If your coverage limit is outdated, your protection is too.

Another key area that gets overlooked? Business income coverage. Many contractors don’t realize their property policy may not automatically include Actual Loss Sustained or Business Income and Extra Expense endorsements. These coverages help replace your lost income if your business has to shut down temporarily after a covered event—like a fire, flood, or theft—so you can keep paying bills, employees, and yourself while you recover.

Without business income protection, a single disaster could stop your cash flow and push your company to the edge. Sadly, we see too many businesses go under after a loss not because of the damage itself, but because of the downtime that follows.

At our agency, we take the time to evaluate your true property values, ensure your policy limits reflect today’s costs, and add the right endorsements—so there are no surprises when you need coverage the most. We’ll also explain the fine print and help you avoid policies that skimp on protection just to save a few bucks up front.

Commercial property insurance isn’t just about checking a box—it’s about protecting everything you’ve built. Let us help make sure your coverage keeps pace with your business, so you're never left exposed when it matters most.