What factor is crucial in determining coverage limits for business property?

The replacement cost of the property is a crucial factor in determining coverage limits for business property because it reflects the amount of money that would be needed to replace the property with a similar one, using materials of like kind and quality. This measure ensures that, in the event of a loss, the business can adequately recover and restore its operations without facing financial hardship. Unlike market value, which can fluctuate based on various external economic factors, replacement cost provides a more stable and realistic basis for insurance coverage. It focuses on the actual cost of rebuilding or replacing the property, which is essential for maintaining business continuity in the face of damages or loss.