If you’ve noticed a steady increase in the price of consumer goods over the past few years, you’re not alone. Experts have noticed a significant hike in many items over the past year—from food to utilities and yes, even insurance.
But this doesn’t just apply to homeowners policies. Commercial insurance rates are increasing as well.
If you’re a business owner, keeping costs down is one of your top priorities, so let’s take a closer look at why commercial property insurance is so high right now (and what you can do about it).
Why Are Commercial Property Insurance Rates So High?
There are multiple reasons why commercial property insurance in Florida is so expensive, but ultimately, the biggest contributor is an increase in claims.
It all comes down to the way insurance works. Insurance companies collect premiums and use that pool of funds to pay policyholders’ claims. If more money is going out than coming in, the business is in danger.
When Florida is hit by hurricanes, windstorms, hail, tornadoes, or other losses, insurers may end up paying out a lot more than they expected. And due to rising construction costs, it’s more expensive to repair homes and businesses than it used to be.
As a result, insurers need to find ways to balance the books.
How Do Insurance Companies Make More Money?
There are a few things insurers can do to keep themselves afloat, but one you’ve already noticed is raising commercial property insurance costs.
By increasing the amount of premiums coming in, insurance companies have a better chance of being able to pay policyholders when they file claims. Some insurers may even rewrite policies upon renewal with lower limits and fewer coverage options.
Additionally, insurance companies place limits on how many policies they are willing to write. A company might decide that it can write, say, $100 million worth of business property insurance in Florida and, once they reach that limit, they’re done.
Commercial Insurance Rates Affect Everyone
As any economist can tell you, price increases have far-reaching effects on multiple areas. Here in Florida, this often shows up as increased rent costs—not because of supply and demand, but simple profit and loss.
In the past, an oversaturation of commercial buildings—think apartment complexes and strip malls—meant landlords had to lower prices to be competitive. But when insurance costs go up, owners of commercial buildings end up passing those costs down to their tenants.
Rent goes up, even when there is an abundance of properties available to lease.
How To Lower Your Commercial Property Insurance Rates
When it comes to lowering commercial property insurance rates, a good deal of it is out of your control. Rates are often determined by your industry, level of experience, income, location, and more.
But that doesn’t mean there’s nothing you can do.
Your first step should be to use an independent insurance agent when shopping around for commercial insurance coverage. Independent agents are not tied to a single carrier (such as State Farm). Instead, they have relationships with multiple insurance companies, making it easier to find the type of coverage that fits your needs as well as your budget.
Independent agents have an incredible wealth of knowledge about the industry as well, so they can advise you on the types of coverage and policies you may need (beyond business personal property insurance).
Once you’ve secured coverage, you can also help lower your costs by filing fewer claims.
Remember, the more your insurance company has to pay out, the more they need to take in so they can keep honoring those policies. When you experience a loss, take some time to weigh the cost to replace the damage against your deductible. If the value of the claim isn’t much more than your deductible, you might be better off handling the replacement costs out of your own pocket.
Looking For Affordable Commercial Property Insurance?
In a hard insurance market, it’s going to be difficult to find truly “cheap” commercial insurance rates. But working with an independent insurance agent like Darr Schackow Insurance gives you the best chance of maximizing your insurance budget without sacrificing coverage.
Our friendly agents will discuss your needs to build a network of coverage that works for you, so you can get back to work in confidence.
Call today for a free business insurance quote.
