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This is a business coaching episode that teaches about the insurable value in real estate.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Definition Magician: Insurable Value - The value of the portions of the property that are physically destructible.
  • Lesson Nugget: Insurable value is not based on the market price, it is based on the replacement cost of the building and the contents of the building.

insurable value explanation like udemy, find alternatives to lynda.com


-All right, Thrivers. I'm Clay Clark and w e are here in sunny San Diego, and I am here with Michael on Thrive15.com, one of the alternatives to lynda.com . There is no real estate topic too obscure Burer to talk about a topic that I know that you're passionate about that you need to know about. It is called insurable value. Now, I'm going to read the definition and he's going to tell us a little bit about it and what it means in the context that you and I and other business owners need to now. So here we go. Insurable value-- the value of the portions of the property that are physically destructible. What does that mean, my friend?

-So this is the value you would declare to your insurance carrier for them to replace in case the building was destroyed. So this is the building, maybe the contents of the building, the mechanical equipment in the building, but usually not the land.

-Let's say that I own a restaurant and my restaurant's worth $1 million. If it's in San Diego, it's going to be worth about $4 million for the property, but let's say I have a $4 million property in San Diego. You're saying it's not the value of the land?

-Yeah, and it's not the market value, so your building may be worth $4 million if you were going to go sell it, but it may cost you $6 million to replace it. So that would be the insurable value, which is completely separate from what it would cost to buy it today.

-How do people sometimes get that wrong? How do sometimes people confuse it or mess it up? Is there anything that you see common in the world of commercial real estate where people have the insurable value messed up?

-Well, sometimes they understate that value.


-Either because they don't have all the right numbers or because maybe purposely they want to reduce their insurance costs. But it's dangerous because if you ever have a claim then you're going to be under insured.

-I put in all my insurance forms and I'm worth $4.

-There you go.

-It's very cheap, very affordable, very economical. Now, last night we had a brainstorming session with the crew. We were like, how are we going to show this guy how much we appreciate him? And so each guy got a chance to write a little phrase for you, and I want to read this one to you. Ben, one of our trusted Thrive adviser videographer, wrote this. He says, even if you could share with me the secrets of picking a perfect March Madness bracket I could not appreciate you more for being here. Thanks, man.

-That's right.

BOTH: Boom.

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