According to multiple industry reports, property insurance rates are going to continue to surge in 2023 – especially in catastrophe prone areas like North Texas. The fourth quarter of 2022 saw the 20th consecutive quarter of increasing rates.
Capacity for property accounts has decreased dramatically due to the high cost or inability to obtain reinsurance in catastrophe prone or with accounts with large loss activity or poor risk management. In addition, the ongoing impact of inflation is continuing to drive up the costs when a loss does occur.
What does this mean?
Other than seeing an increase in your renewal premium between 15-50%, you may see one or more of the following:
1) Wind and hail deductibles increasing to 2% at a minimum and 5% at a maximum. In some instances, we have seen companies refusing to write wind coverage at all.
2) Requirements for updates to the roof, plumbing, electrical and HVAC (heating and air) to all have been done within 25 years if you want replacement cost coverage.
3) Requirement to insure to 100% of the replacement value of the property and using their own calculations to verify (we have seen requirements to increase with some properties)
4) Requirements for central station burglar, fire and/or sprinklers dependent upon location variables. Note: to obtain theft coverage most companies now require a central station burglar alarm.
What else should I be watching for?
With inflation continuing to rise, so is the replacement cost of your property. You should be working with your agent every year to ensure you have the correct replacement cost coverage. With all commercial property there is a co-insurance limit (normally 80%) which means you must have at least 80% of the building’s value in your coverage limits or you will have the co-insurance penalty imposed, which could be substantial.
Learn more about how a coinsurance penalty may apply to you: What is a coinsurance penalty and how does it work?