How do I determine the right amount of coverage?

Complete Guide to Determining the Right Amount of Commercial Property Coverage

Why This Question Matters for Colorado and Utah Residents

Getting your coverage limits right isn’t just a paperwork detail—it’s the difference between bouncing back quickly and facing major out-of-pocket losses after an incident. For Colorado and Utah businesses:

• Regional weather is unpredictable and severe: Colorado ranks #2 nationally for hail claims, and both states see expensive rebuilding after hail, wildfire, or winter storm damage. Construction costs have risen 20%+ in many areas due to material and labor shortages.
• Local risks shape your needs: Hail corridors (e.g., Fort Collins, Greeley), wildfire zones (Front Range, Park City), and flood-prone areas after wildfires require specific attention.
• Replacing assets at today’s prices saves you later: Most businesses underestimate costs by 20-30%, often learning after a claim that limits didn’t reflect actual rebuilding or equipment replacement expenses.

What Most People Get Wrong

The most common mistake is relying on the original purchase price or outdated asset lists rather than true replacement cost. Many also focus solely on the building, forgetting expensive contents, technology, or structural improvements.

Another widespread error: assuming a policy covers all disasters. In reality, flood, ordinance/code upgrades, and business interruption often require specific add-ons. Don’t overlook these exposures in Colorado’s and Utah’s evolving climate and regulatory environments.

The Complete Picture

Accurately determining your coverage involves these steps:

• Inventory all property assets—buildings, inventory, machinery, fixtures, computers, and specialty equipment. Use photos and receipts for documentation.
• Assess replacement cost at current market rates. Construction, materials, and labor are all up substantially since 2020 (as much as 25% in high-growth counties).
• Consult with a local broker who understands regional risks and code requirements. They can suggest limits, highlight required coverages for hail-prone or flood zones, and help you review deductible options that fit your cash flow.
• Consider business interruption and ordinance/law endorsements, since 67% of businesses have inadequate income protection—and code upgrades can add 15-50% to rebuild costs.

Bottom line: Properly assessing your needs with expert help and fresh local data is the best way to sleep well at night—knowing a single storm or fire won’t threaten your business’s future.

Making the Right Decision for Colorado and Utah Residents

Question 1: What would it cost to replace everything today?

Don’t rely on guesses—get up-to-date values for your building, fixtures, equipment, and inventory. Construction costs alone have seen double-digit increases in Denver, Fort Collins, Salt Lake City, and Park City.

• Request a professional replacement cost appraisal or use recent contractor bids.
• Document improvements, new inventory, or specialized gear annually so your limits keep up with business growth.

Question 2: Could your business survive an interruption?

Many businesses with adequate property coverage still close after a loss because they can’t absorb ongoing expenses when revenue stops. Review your business interruption coverage—and consider how long a rebuild would take given current permitting/construction delays in Colorado and Utah.

Question 3: Are there special risks for your location or industry?

Does your area face extreme hail in June, high wildfire risk, or new flood risk from post-fire runoff? Some Colorado and Utah businesses need special endorsements for these threats. Ask your broker to explain potential exclusions and local loss trends relevant to your operation.