In this day and age, building design firms store a significant number of documents electronically, but paper records are still extremely relevant to architects, engineers, and other building design professionals. Whether they are blueprints, drafts, plans, or specifications, most building design companies will have valuable papers and records that need extra insurance coverage.

Building design firms rely heavily on paper documents that are susceptible to being damaged or destroyed. There would be serious consequences for the firm if the valuable papers and records are lost to a fire or other peril. Without a key blueprint or draft, will client projects be significantly disrupted, and will your company be able to survive the financial fallout? This is where Valuable Papers and Records Coverage comes in.

What is Valuable Papers and Records Coverage for building design professionals? Why do I need it?

Valuable Papers and Records Coverage will reimburse you for the monetary value of important documents or the cost of repairing and replacing them. Standard commercial property insurance policies will provide very limited coverage for valuable papers, and it likely won’t be sufficient to cover the value of your papers and records. That’s where Valuable Papers and Records Coverage can help you recover after a loss.

Example:

• A fire causes extensive damage to the building where your architectural firm is located, burning through all of your offices and destroying several of the hand drawn blueprints for a current client. The company must pay your chief architect and his assistants overtime hours to reconstruct the blueprints.

As a building design professional who is considering purchasing this insurance, you’ll need to think about the true cost of restoring or replacing valuable papers. Start with these questions:

• Would you need to hire temporary employees to help replace the papers?
  • Example: If the client files at your engineering firm are destroyed, you will need to hire three clerical workers for eight weeks to recreate them.
• How many hours of work would it take to replace the papers?
  • Example: It takes more than 100 hours for an engineer to recreate the damaged design for a state-of-the-art cruise ship.
• Would you need to obtain original versions?
• Would you need to recreate original work, like blueprints, plans, and drafts?
• Do you have one-of-a-kind or rare documents?
  • Example: On display in the reception area of your architectural firm is the original blueprint for the tallest building in your city, which was constructed in 1921.
• What is the true cost of your valuable papers versus the limit for valuable papers on your standard commercial property insurance policy?

Do these estimates surprise you? Many small and medium-sized building design firms are surprised to discover that they will need more coverage for valuable papers and records than they originally thought.

What counts as valuable papers and records?

Valuable papers and records consist of almost all forms of printed documents and records, except money and securities, stored at your office or nearby at a secure location. They are never electronic—valuable papers and records must be written, printed, or inscribed. Your insurance policy will usually list the types of documents that are covered, and they can include:

• Architectural plans
• Blueprints
• Proprietary designs
• Construction specifications
• Project documents
• Inspection certificates
• Books
• Maps
• Films
• Deeds
• Mortgages
• Manuscripts
• Abstracts
• Card index systems
• Accounting ledgers
• Licenses
• Medical records
• Employee records
• Client files
• Client lists
• Court papers
• Charters
• Patents
• Building leases
• Contracts
• Permits

What are the important conditions and exclusions for Valuable Papers and Records Coverage?

Protection and Security of Important Documents

Insurance companies will look for whether you have taken precautions to physically protect and secure the valuable papers and records that are insured, and your insurer will have defined standards for the security and protection of the papers. If your valuable papers and records are not secured, you will not be able to make a claim against the policy.

Example:

• Your engineering firm keeps the proprietary design you’ve created for a personal airplane in a safe at your office. When a hurricane damages your building, everything from your office is lost. You can make a claim against your insurance policy for the cost of replacing the proprietary design that was in the safe.

Small businesses that take extra precautions to reduce the risk of losing these documents, such as keeping backup copies offsite or storing digital versions, may be offered discounts by their insurance company.

Example:

• Your architectural firm has paper versions of the construction specifications for all of your current projects, but you also had your staff scan the files and create digital copies that you’ve stored on your company’s server. Your insurance company gives you a discount on your premium for Valuable Papers and Records Coverage because of the precautions you have taken.

Wear and Tear

Valuable Papers and Records Insurance will not cover normal wear and tear, gradual deterioration, or latent defects of important papers in your possession.

Named Perils vs. All-Risk

While some Valuable Papers and Records coverage will accept claims resulting from all types of risk, most policies will cover papers destroyed or damaged by a number of named perils such as fire, hail, windstorm, hurricane, burglary, and collapse.

Example:

• Your interior design firm’s drawings are destroyed by a rare flood that submerges the building. Unfortunately, floods are not one of the perils named on your Valuable Papers and Records Policy. You would not be able to make a claim against the policy for the monetary value of the drawings you lost in the disaster.

Limits

Many people are surprised to find out that there is a “sublimit” to the amount your insurance company will pay out to restore or replace valuable papers and records. If your valuable papers are destroyed or damaged, the maximum payout will be the limit for the Valuable Papers and Records Coverage, not the limit of the commercial property insurance policy.

Example:

• Your engineering firm is catastrophically damaged in a fire, and all of your client records are destroyed. Your policy limit for the Valuable Papers and Records Coverage you’ve purchased is $25,000, but your commercial property insurance policy limit is $500,000. The maximum you would be able to receive for the loss of your client records would be $25,000 and not $500,000.

Moreover, even if all of your valuable papers are completely destroyed, the coverage will only pay out the actual cost of restoring or replacing them and never simply the total policy limit.

Example:

• Your sublimit for Valuable Papers and Records Coverage is $50,000, but the actual cost of replacing the project documents you’ve lost in a fire is $25,000. You will only receive the actual cost and not the total policy limit, even if your entire office is destroyed in a fire.

No Coverage for Electronic Records

Building design companies store a great deal of important information electronically, including blueprints, drawings, plans, drafts, and specs, but most Valuable Papers and Records Policies do not cover electronic records. To cover losses of your electronic data, you’ll need to purchase electronic data processing (EDP) coverage.

Reduce the risk of losing valuable papers and records

Safeguarding important, printed documents is critical to the health of your building design company. That way, when natural disasters or other perils strike, you’ll reduce the risk of loss.

The following are a few tips that can help you reduce the risk of your valuable papers and records becoming damaged or destroyed. Insurance companies may be able to offer you a better premium as well if they see that you have taken action to create extra protections for your important documents.

• Store your valuable papers and records in a vault or safe. Return them to the secured safe or vault immediately after using them.
• Keep duplicates of valuable papers and records in a different location that will not be affected by the same incident.
• Scan your documents and keep a copy in digital form.
• Replace your water sprinkler system with a dry chemical extinguishing system that won’t damage important documents.
• Keep your rare papers away from bright lights, high or low humidity environments, or other conditions that may cause them to deteriorate.

Final Word

Building design professionals should consider purchasing Valuable Papers and Records Coverage in order to protect important printed papers and documents from a variety of natural disasters and other perils. These documents may be crucial to your business revenues and client relationships, from blueprints to drafts to specifications. In cases where your valuable papers and records are damaged, are you prepared for the disruption it could cause to your business? Restoring or replacing the documents may be a costly endeavor due to the cost of labor and other factors, and Valuable Papers and Records Coverage can help your business recover quickly from this type of loss.