Running a business in Pennsylvania comes with a range of responsibilities; and protecting your physical assets is one of the most critical. Over the past few years, many business owners have noticed an uptick in their commercial property insurance or business property insurance premiums. While rate changes are not uncommon in the insurance world, the scale and frequency of recent increases have prompted more questions than usual.
At Everoak Insurance Group, we’re here to help you navigate these shifts and understand the factors driving premium changes in Pennsylvania’s evolving commercial insurance market. Let’s take a closer look.
Why Are Commercial Property Insurance Rates Increasing?
Several interrelated trends are influencing the current pricing environment for commercial property insurance in Pennsylvania and nationwide. While every policy is underwritten based on its own risks, here are a few of the broader reasons why premiums are on the rise:
- Inflation in Construction and Materials: Rebuilding or repairing damaged properties has become significantly more expensive due to rising costs for materials like lumber, steel, and concrete. Labor shortages in the construction industry also contribute to higher costs.
- Increased Weather-Related Losses: Pennsylvania isn’t immune to extreme weather events. While we may not face hurricanes like the coastal states, severe storms, flooding, and winter-related damage can still result in substantial claims.
- Higher Reinsurance Costs: Insurance companies themselves purchase insurance, known as reinsurance, to protect against large-scale losses. As global risks grow, reinsurance has become more expensive, which trickles down to policyholders.
- Valuation Adjustments: With inflation and market volatility, properties may now be undervalued based on older estimates. Insurers are adjusting property valuations to align with current replacement costs, which can result in higher premiums.
How Do Insurance Carriers Assess Commercial Property Risk?
Insurance carriers evaluate a wide range of factors when determining a business property insurance premium. These can include:
- Property Age and Condition: Older buildings may have outdated wiring, plumbing, or roofing, which can increase fire or water damage risk.
- Location: Properties located in flood-prone areas or urban centers with high foot traffic might face higher premiums due to increased exposure to losses.
- Type of Business: The nature of your operations matters. For instance, a restaurant with cooking equipment poses a different risk profile than an office-based business.
- Claims History: If your business has a history of property damage claims, carriers may view it as higher risk, impacting your premium.
Working with an independent agency like Everoak Insurance Group helps ensure that your property is accurately assessed and that you receive guidance on how to potentially lower your risk profile.
What Can Pennsylvania Business Owners Do to Manage Rising Premiums?
While you can’t control market forces, there are proactive steps you can take to make your commercial property insurance policy more cost-effective:
- Review Your Policy Annually: Ensure your coverage reflects current property values and business needs. An annual review with your insurance advisor can uncover ways to improve protection and cost-efficiency.
- Invest in Risk Mitigation: Installing sprinkler systems, upgrading security features, or modernizing electrical systems can reduce your exposure to losses—and possibly your premium.
- Bundle Coverage Where Appropriate: In some cases, bundling your property insurance with general liability insurance or other policies into a Business Owners Policy (BOP) can offer both convenience and savings.
- Consider a Higher Deductible: Raising your deductible can lower your premium, though it means you’ll pay more out-of-pocket in the event of a claim.
- Work with an Independent Insurance Agent: Independent agencies like Everoak Insurance Group have access to multiple carriers and can help you compare options tailored to your industry and property type.
How Does Pennsylvania’s Commercial Real Estate Market Impact Insurance Rates?
Local market conditions play a significant role in business property insurance premiums. In Pennsylvania, the commercial real estate landscape has seen notable shifts:
- Urban Revitalization Projects: Cities like Philadelphia and Pittsburgh are seeing an increase in mixed-use developments and commercial conversions, often increasing property values—and insurance premiums.
- Vacancy Rates and Maintenance: Unoccupied buildings may present higher risk to insurers, especially if they lack regular maintenance. If your property is vacant or partially occupied, that could affect your rates.
- Local Building Codes and Inspections: Compliance with Pennsylvania’s building codes and fire safety regulations can influence premium pricing. Up-to-date systems and code compliance generally work in your favor.
What Role Does Business Interruption Coverage Play?
In today’s landscape, many business owners are also evaluating the role of business interruption insurance, a key component often tied to commercial property policies. This coverage can help replace lost income during periods when your property is unusable due to a covered loss, such as fire or storm damage.
While premiums for this type of coverage may also be increasing, it’s worth discussing with your insurance advisor whether the potential benefits justify the cost. Having robust business interruption protection can be critical in helping your business weather an unexpected shutdown.
How Can Everoak Insurance Group Help Pennsylvania Businesses?
At Everoak Insurance Group, we’re committed to helping Pennsylvania business owners understand and navigate the complexities of commercial property insurance. Whether you’re operating a manufacturing facility in Allentown, managing a retail storefront in Scranton, or leasing office space in Harrisburg, our team brings local insight and customized solutions to your insurance planning.
Here’s how we support your business:
- Tailored Risk Assessments: We analyze your unique property and operations to recommend solutions aligned with your goals.
- Multiple Carrier Options: As an independent agency, we provide access to a variety of insurance carriers, allowing us to find competitive rates and comprehensive coverage.
- Ongoing Policy Support: From annual reviews to claims support, we’re your long-term partner in protecting what you’ve built.
Rising premiums don’t have to catch you off guard. With the right knowledge and a trusted advisor on your side, you can take control of your business’s insurance strategy.
Ready to talk about your commercial property insurance needs? Contact Everoak Insurance Group today to schedule a personalized consultation with one of our local Pennsylvania agents. Let us help you protect your property—and your peace of mind.