What must be included in a commercial policy for it to fully cover recent construction according to its stipulations?

To fully cover recent construction, a commercial policy must include maintaining at least 80% of the property's replacement cost. This requirement ensures that the insured amount is sufficient to rebuild or repair the property in the event of a loss. The principle behind this is to provide adequate coverage to meet the current costs of materials, labor, and other factors involved in constructing a similar property today.

If the coverage falls below this threshold, the policy may not pay out the full value of a loss according to the terms of the insurance agreement, potentially leading to a situation where the policyholder faces significant out-of-pocket expenses after a claim. This coverage requirement fosters a fair balance between premiums and potential payouts, ensuring both the insurer and the insured meet their obligations in the event of loss.

Maintaining a value of 70% or liability insurance alone does not suffice for this type of comprehensive property protection, as neither addresses the necessary coverage level for recent construction.