The average monthly cost of insurance for a commercial building in the United States could increase from $2,726 in 2023 to $4,890 in 2030, at an 8.7% compound annual growth rate. Here’s how proactive maintenance can help keep costs low as a property owner or manager.

Why Is Commercial Insurance Getting So Expensive?

• 2013: $1,558 per building per month 
• 2023: $2,726 per building per month
  • In just 10 years, Commercial Insurance Nearly doubled.
  • $2,726 in 2023 per building, compared to $1,558 in 2013.
  •  
• Why is this happening?
  • More extreme weather events
    • 28 billion-dollar extreme weather events in 2023 (56% increase from 2022)
      • 19 severe storms (tornadoes, high winds, and hailstorms)
      • 4 floods
      • 2 tropical cyclones
      • 1 wildfire
      • 1 winter storm and cold wave
      • 1 drought and heat wave
    • Estimated recovery costs: $92.9 billion
    • As many as 42 billion-dollar extreme weather events annually by 2030
      • “This added risk has caused certain insurers in some states to reduce coverage or vacate altogether” – Time Magazine
  • Playing catch-up from increased losses
    • From Q1 2021 to Q4 2022, US property insurance premium growth rates were behind inflation growth for 8 quarters

How Proactive Maintenance Affects Your Commercial Insurance

1. There are several layers for property owners and managers:
   1. Claims history
      1. Insurance premiums are largely influenced by your claims history
         1. Includes:
            1. Liability claims
            2. Damage claims
         2. The more claims you file, the more likely your rates are to increase.
      2. Preventative maintenance helps prevent incidents that would otherwise trigger claims, such as:
         1. Water damage
         2. Electrical fires
         3. Slip-and-fall injuries
      3. Better loss record = lower premiums
   2. Asset care and risk management
      1. Reduce wear-and-tear-related failures and claims
   3. Life Cycle Roof Management in these states may be more helpful when defending against natural hazards like:
      1. Weather and Natural Factors 
         1. Freeze and thaw
         2. Temperature-based shrinkage and expansion
         3. Hail
         4. Snow weight
         5. Ice dams
         6. Strong winds
         7. Clogged drains from leaves and other debris
      2. Industrial Factors
         1. Grease
         2. Chemicals
         3. Exhaust / burnoff
         4. Dust

By just spending $2,000 — $3,000 annually on maintenance programs of a 20,000 sq. ft commercial roof* $100,000 — $200,000 IN UNNECESSARY COSTS CAN BE AVOIDED 

OVER THE LIFETIME

* corresponds to preventing one premature full replacement + ongoing maintenance and repairs

What Does Preventive Maintenance Include for a Commercial Roof?

• Life Cycle Roof Management in the Midwest includes:
  • Annual inspections
    • Regular roof inspection may lead to an insurance discount or lower rate
  • Drain cleaning
    • Leaves and other debris can accumulate in drains backing up drainage and creating additional damage
  • Snow removal
    • Heavy loading caused by snow accumulation can lead to leaks, structural damage and collapse
  • Ice dam removal
    • Built up ice can result in damage to the property
  • Heat tape installation
    • Proactively reduce ice damage by installing heat tape in areas that frequently accumulate ice
  • Risk Mitigation
    • In addition to property damage snow and ice create a serious injury risk resulting from: slips, falling ice and snow, and roof collapses
• So how much will you save?
  • Depends on your insurance company
  • Other costs besides insurance:
    • Not replacing your roof too early: $50,000 to $600,000+
    • Damaged caused by an unsound roof (early detection): 
    • Reactive repairs: Cost 3 to 4x more per incident than planned maintenance

Proactive maintenance saves $0.11 sq/ft per year compared to reactive maintenance. How can you maximize your savings with your insurance policy?

How to Maximize the Insurance Value of Commercial Preventive Maintenance

• 1. Documentation

• • • Maintenance records can help reduce your insurance premiums
    • Requires you to document:
      • Inspections
      • Repairs

• Safety checks

• Proper roof access

• Ladders

• Hatches

• Railings

• • • These demonstrate better:
      • Eligibility for coverage
      • More agreeable insurance terms
      • Deductibles or policy discounts

• 2. Quality materials and installation

• • • Many commercial property insurers limit or exclude coverage once a roof passes ~20 years
      • Also ensures you do not void your warranty

• 3. Life Cycle Roof Management™ 

• • Service providers like Kato Roofing offer customer portals for:
    • Property Portfolio
      • Inspections
      • Reports
      • Documentation
      • Multi-year repair plan
  • These assist with:
    • Budget planning
    • Maximizing ROI
    • Improving roof lifespan
• Includes preventative maintenance program with:
  • Professional inspections
  • Written and visual documentation
  • Repairs and maintenance

See how much you can save on your next roofing project with a detailed roof analysis.

Sources

ncei.noaa.gov/access/billions

katoroofing.com/contact/#request-estimate 

ciab.com/resources/q4-2023-p-c-market-survey

bankrate.com/insurance/homeowners-insurance/roof-inspection

shepherdins.com/roof-ages-impact-on-commercial-property-insurance

time.com/6306005/climate-change-insurance-costs-commercial-real-estate

buildings.com/buildings-industry-news/article/10189646/commercial-roof-maintenance-a-proactive-approach 

deloitte.com/us/en/insights/industry/financial-services/impact-of-climate-change-on-commercial-real-estate-insurance-costs.html