Top 5 Factors That Affect Commercial Property Insurance Premiums

Commercial property insurance is essential for protecting your investment, but premiums can vary widely. This blog explores the top five factors that influence your insurance costs and how Wexford Insurance can help you find the right coverage at the best rate.

1. Location and Geographic Risk

Where your property is located plays a major role in determining your insurance premium. Insurers assess geographic risks such as:

• Natural disasters (e.g., hurricanes, floods, earthquakes)

• Crime rates (e.g., theft, vandalism, arson)

• Proximity to emergency services (e.g., fire stations, hydrants)

For example, a property in a coastal Texas city may face higher premiums due to hurricane exposure, while a building in a high-crime urban area may be rated higher for theft risk.

2. Building Construction and Age

The materials used in your building’s construction and its age significantly affect your premium. Insurers evaluate:

• Construction type (e.g., wood-frame vs. fire-resistant concrete or steel)

• Age of the building and compliance with modern safety codes

• Presence of safety features like sprinkler systems, fire alarms, and updated electrical systems

Older buildings or those made with combustible materials typically cost more to insure due to increased risk of fire or structural failure.

3. Occupancy and Business Use

The type of business operating within your property also impacts your insurance rate. Insurers consider:

• Foot traffic and customer volume

• Hazardous materials or equipment

• Business hours and operations

For instance, a retail store with high foot traffic or a restaurant with open flames will likely have higher premiums than a low-risk office space.

4. Property Value and Contents

The higher the value of your building and its contents, the more expensive it is to insure. Insurers calculate premiums based on:

• Replacement cost of the structure

• Value of equipment, inventory, and furnishings

• Specialized or high-value assets on-site

Accurate property valuation is essential to avoid being underinsured or overpaying for coverage.

5. Claims History

Your claims history is a strong indicator of risk. Insurers look at:

• Frequency and severity of past claims

• Patterns of recurring issues

• Risk mitigation efforts

A clean claims record can help reduce your premium, while a history of frequent or large claims may increase your rates.

Final Thoughts

Understanding what drives your commercial property insurance premium is the first step toward managing costs and securing the right protection. By addressing risk factors and working with a knowledgeable insurance partner, you can ensure your property is well-protected without overpaying.

Contact Wexford Insurance today to get a customized quote and expert guidance tailored to your commercial property needs.