Why Are Commercial Property Insurance Rates Rising?

Commercial property insurance rates have been on the rise in recent years. This can be a major expense for businesses, so it's important to take steps to keep your rates as low as possible.

Here are four tips to help you do just that:

  1. Shop around and compare rates from different insurers.
  2. Maintain a good claims history.
  3. Keep your property well-maintained and up-to-date.
  4. Consider bundling your commercial property insurance with other policies.

By following the tips in this video, you can help keep your commercial property insurance rates low.

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Why are Commercial Property Rates Rising?

In the video above we broke down exactly why commercial property rates are rising.

Below we examine four ways you can help keep your commercial property rates as low as possible.

By focusing your effort on these four actions you can reduce the overall increase

1) Shop Your Commercial Property Insurance

The first thing you need to do to keep your commercial property insurance rates low is to shop your coverage.

This means getting quotes from multiple insurers and comparing them side-by-side. Make sure you're comparing apples to apples, though, and that the coverage limits and deductibles are the same.

You should also make sure you're getting quotes from insurers who specialize in commercial property insurance.

These companies will have more experience insuring businesses like yours and will be able to give you better rates.

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2) Maintain a Good Claims History


Another way to keep your commercial property insurance rates low is to maintain a good claims history. This means not filing any small claims and only filing major claims when absolutely necessary.

Insurers will also look at the severity of your claims when determining your rates. So, if you do have to file a claim, make sure it's for a large amount of money.

Filing multiple small claims will cause your rates to go up significantly, so it's best to avoid this if possible.

3) Keep Your Property Well-Maintained


Another way to keep your commercial property insurance rates low is to keep your property well-maintained. This means making sure it's in good repair and that there are no potential hazards.

The better condition your property is in, the lower your rates will be. So, it's worth it to invest in maintaining your property and keeping it in good shape.

This will also help you avoid claims, which will further lower your rates.

Property insurance companies also offer discounts for properties that have certain security features, such as alarm systems or security guards. So, if you have these features, make sure to mention them when you're getting quotes.

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4) Bundle Commercial Property Insurance with Other Coverages


One final way to keep your commercial property insurance rates low is to bundle them with other coverages.

This means buying multiple policies from the same insurer, such as liability insurance, workers' compensation, and commercial auto insurance.

Bundling these coverages together will usually give you a discount on all of them. So, it's a great way to save money on your overall business insurance costs.

These are just a few tips for keeping your commercial property insurance rates low. By following these tips, you can be sure that you're getting the best possible rate on your coverage.

Shopping around, maintaining a good claims history, and bundling your coverages are all great ways to save money on commercial property insurance.

Developments & Trends in Commercial Property Insurance


Here are two trends that are currently impacting the commercial property insurance market that is causing premium rates to rise.

Natural disasters

The growing frequency and severity of natural disasters have continued to pose concerns across the commercial property insurance market.

After all, these catastrophes often leave behind severe property damage and associated losses for affected establishments.

According to industry experts, natural disasters cost the global economy $32 billion in the first quarter of the year, with under half of those expenses ($14 billion) covered by insurers. Such costs are only expected to persist—and even worsen—during the remainder of 2022, largely due to predictions of an above-average hurricane and wildfire seasons.

Specifically, Colorado State University researchers anticipate 20 named tropical storms to occur in 2022, with 10 becoming hurricanes and five reaching major strength with sustained winds of more than 111 mph.

Additionally, the National Interagency Fire Center reported that wildfires have already burned more than 2.6 million acres throughout the West Coast so far this year, nearly doubling the number of acres burned at this time in 2021.

Such numbers indicate yet another intense wildfire season in the months ahead. Further, many climate experts estimate that natural disaster trends will continue to exacerbate related losses in the coming years. 

Supply chain and inflation issues

The COVID-19 pandemic and various foreign disruptions have contributed to a range of material shortages (e.g., lumber and metal), supply chain issues, and inflation concerns within the past few years, thus impacting overall property construction and valuation costs.

The first half of the year has seen exceptionally high inflation levels. In fact, as of May 2022, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) had risen 8.6% in the past 12 months, representing a 40-year high.

According to industry experts, such inflation issues have resulted in property construction costs rising by 10%–15% (depend- ing on local conditions) between 2021 and the beginning of 2022. Compounding concerns, ongoing worker shortages in the construction industry have led to elevated labor costs and project delays.

Consequently, policyholders may face more claims severity and possible underinsurance issues if losses require them to rebuild structures or replace business personal property at higher costs.

Moving forward, overall inflation issues are expected to continue—potentially keeping property-related losses and subsequent claims costs high for years to come. 

The Rub

The commercial property insurance market has hardened in recent years, with consistent rate increases since the third quarter of 2017.

These rate increases were evident at the beginning of 2022, with first-quarter rates rising by an average of 7.6%, according to industry data.  

By being aware of rising commercial property insurance costs and the ways to mitigate those increases you can proactively work to reduce your overall business insurance expense.

This is where we come in at Rogue Risk.

Our insurance specialists can help you navigate the insurance market and ensure you have coverage without being overcharged.

You can start by using one of the options below to get a quote today!

We look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley

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