As climate change continues to create more turbulent weather and natural catastrophes, commercial property insurance rates are still climbing — and the recent surge in inflation is adding fuel to the cost of coverage.
While overall commercial property rates increased about 10% on average in 2021, rates surged between 25% and 40% in areas prone to natural catastrophes during that same period, according to MarketScout, which tracks insurance prices. The hardest-hit areas have been for businesses located in California and the southern coast of Florida.
Besides climate, the cost of claims is also rising in response to the higher costs of building materials and the cost of labor in the construction industry. That’s adding to the cost of insurance across the board, even for properties in lower-risk areas.
The cost of natural disasters has been increasing exponentially in recent years as hurricanes and storms grow in number and intensity on the Atlantic and wildfires ravish large swaths of the West. Other parts of the United States face their own challenges, such as tornadoes in the Midwest and flooding in many parts of the country. Cost of Commercial Property Insurance Surges Thanks to Inflation, Climate Change