Typically, you want to insure your buildings for the cost to rebuild, this is referred to Replacement Cost Coverage. You do not want to insure too high because you will not get more than it actually costs to rebuild and yet you also do not want to insure too low which leaves you exposed at the time of the claim by not having enough insurance money to cover the costs to rebuild.
Even with actual quotations from a Contractor or having an Appraisal completed, you do not know with absolute certainty what the limit of coverage should be. There are a lot of outside forces that affect the replacement cost. A few examples: fluctuations of the Canadian Dollar, varying material prices, government regulations, bylaws and fuel prices.
No two buildings are the same; options chosen and quality of equipment alter the replacement cost greatly. Similar facilities can differ in replacement cost by more than 25 to 50%.
A consideration is the cost to clean-up debris prior to rebuilding. In today’s world of environmental considerations and government regulations these costs can be substantial.
Also you need to consider the extra cost associated with having to build in the winter because you may not be able to wait until summer to start rebuilding.
Debris removal and winter build can increase the amount of coverage needed by 20%.
Be sure to seek advice and purchase insurance from those who understand your business!