Your company’s building is likely the most important (and expensive) part of your business. Whether you run an accounting firm or a manufacturing center, you need your office, warehouse, or machining space. Without it, your company can’t function efficiently. Think about it: without this space, where would your employees work? The crucial importance of your commercial property is exactly why you have commercial property insurance.
However, you may have noticed that your premiums have risen recently. Why is this the case? Here are several factors that may be causing your commercial property insurance to increase.
The Materials Are Scarce
A number of things go into the availability of construction items like lumber, drywall, and paint. Many components of them, like the paint cans or lumber itself is imported into the United States. During the pandemic when everyone is forced to stay home, there was a huge need for building materials, as many people suddenly got interested in home improvement. They cleared the shelves, and new shipments were held up at the docks. A lack of stock caused the prices of every type of material to rise.
The Problem with Inflation
Inflation occurs when the value of the dollar shrinks, while the price of goods goes up. Unfortunately, the two don’t fluctuate equally, leaving products costing more than they did before. At the same time, the dollar doesn’t maintain the buying power it had previously. This inflation is part of why commercial property insurance premiums are rising, due to the overall costs of the materials needed to replace or repair your company’s building.
The New Tariffs Aren’t Helping
On top of existing inflation and the overall costs of raw building materials, there are now tariffs in place that add to the price. These tariffs vary, based on the location that the materials are brought in from to the type of material that they are. For example, lumber from Canada has a different tariff on it than the drywall that comes from China. Nevertheless, this is just another factor in the overall cost.
Why The Cost of Commercial Property Insurance Goes Up
As you can see, there’s a lot that goes into the cost of replacing or repairing your building. Between the general cost of materials thanks to things like rarity, inflation, and tariffs, repairs cost more than ever before. In order for your entire building to be covered by your commercial property insurance plan, your premiums need to go up. After all, they need to make sure to cover all of the costs, just in case something happens. The more it costs to fix your building, the higher your insurance payouts need to be, as well as your matching premiums.
Reach Out to Spivey Insurance
Do you have questions regarding the price of your commercial property insurance premiums? Do you think that you might possibly need more coverage so that you won’t have to worry about a lack of coverage should something happen to your company’s building? If so, then reach out to Spivey Insurance. Our knowledgeable agents can answer questions that you may have, as well as help you find the best policy for your company’s needs.
