If your business property is lost, damaged or destroyed, insurance will pay the fair value of the item. Usually, this is relatively straightforward: You determine the replacement cost or current actual cash value, and the adjuster approves a settlement.

However, for certain types of property, the valuation process gets a bit murkier, especially for computers and other electronic devices (such as smartphones). These sophisticated high-tech items are portable and at high risk for loss or damage. For years, the cliche about buying a new car was that it lost a fourth of its value as soon as you drove it off the lot. High-tech devices can make new cars seem like wise investments. When you replace a laptop, tablet, or smartphone, it's hard to calculate the value of a similar device bought two years ago because a more powerful, less expensive version has probably replaced it.

To value such items accurately for insurance purposes if they're lost, severely damaged or destroyed, you have three main choices:

  • In the unlikely event that you want to replace the insured property with exactly the same equipment, the cost would be far less than you paid originally.
  • The cost to replace the devices with new equipment of equal capacity, speed, etc. would be higher, but still far less than the original cost of the old devices, due to advances in technology.
  • You might decide you want the best equipment you can buy for the same price you paid originally. Although the "replacement" values remain the same, the new devices would be far more powerful and advanced.

Depending on your decision, the amount of coverage you need will vary and your policy(ies) might require modification.

Our business property specialists offer a valuable resource. They can help you value your current stock of high-tech devices, plan for replacing lost, damaged, or destroyed devices, and guide you in choosing the right policy and coverages - to make sure that your insurance doesn't become obsolete as fast as your computers.

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