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As weather-driven catastrophes become more common and severe, commercial property owners and the agents who serve them are reassessing risks and coverage to get more build for their buck.

The new Nationwide Agency Forward surveyed commercial property stakeholders about what they’ve experienced in the last five years and how those lessons impact today’s insurance decisions.

Catastrophes Hit 1/3 of Commercial Property

Nationally, roughly one-third of commercial property owners have suffered damage from a natural disaster in the last five years; this rises to more than half in wildfire-risk states and almost two-thirds in hurricane-risk states.

Among insurance agents, severe weather risk concern has risen since 2023鈥攅specially in states most prone to wildfires and hurricanes鈥攚ith 74% either “very concerned” or “extremely concerned,” up five percentage points since 2023.

Overall, the number of agents and stakeholders who were very/extremely concerned was the highest in wildfire risk states (93%, up 28 percentage points since 2023) and hurricane risk states (86%, up 16 percentage points).

Claims and Quick Recovery

Most commercial property owners who have been impacted by natural catastrophes have recovered within six months of the event, with expenses for most totaling under $10,000. Thirty-one percent said damages totaled under $3,000, and only 1% reported they had over $50,000 in damages. Almost half (46%) reported that their insurance covered all of their damage.

Top commercial property claims included broken windows (43%), structural damage (41%), damaged electrical systems (39%), roof damage (37%), business interruptions (37%) and water intrusion/flood damage (32%).

Cutting Commercial Costs

The risk of damage is up against the cost of coverage for many commercial property owners. Most property owners are looking for ways to cut insurance costs, and more than 40% are willing to reduce insurance coverage to lower their premiums.

Among respondents, 72% said they are always looking for ways to cut costs, and 42% said they would cut back on coverage to lower their premiums. However, of the 58% who said they would not skimp on coverage, 70% were in hurricane-prone states.

Instead, bundling policies and seeking better quotes from other carriers are the favored actions taken, with 69% bundling policies and 56% shopping around for better rates.

Fifty-four percent reported that they had dropped or declined optional coverages in the last year to lower costs.

Only 28% of national commercial property stakeholders reported reducing coverage over the last 12 months, with slightly lower numbers in wildfire (24%) and hurricane (23%) prone states. Nationally, 30% said they had raised their deductible to lower premium cost, with wildfire-prone areas opting for higher deductibles at a higher rate (35%) than hurricane-prone areas (26%).

Building for Mitigation

Across the board, the vast majority of agents and stakeholders (90%+) place a high priority on prevention and mitigation through building code compliance, with 100% of stakeholders in wildfire-prone areas and 98% of stakeholders in hurricane-prone areas agreeing that building code compliance is vital for protecting property from severe weather damage. And 99% of wildfire and 98% of hurricane area property owners agree that enhanced building standards will protect their property investment.

Most (86%) of property owners are very/extremely familiar with the FORTIFIED standard developed by the Insurance Institute for Business and Home Safety but find that researching options, construction costs, access to advice and business interruption are all barriers to upgrading existing buildings. Many agents across the country (41%) agree that the building codes in their areas may be outdated when considering the increasing risks.

Just over half of agents and stakeholders (51%-56%) would prioritize penalizing building code violations.

Topics Commercial Lines Business Insurance Property