Why Commercial Property Insurance Costs Keep Rising in High-Risk Areas

Commercial property insurance is still available—even in tough markets—but there are more challenges than ever. While location remains a big factor, the story doesn’t end there. The age of the building, how it was constructed, and the materials used also play a major role in both insurance cost and availability.

Below are some key questions we hear regularly, along with insights to help navigate the market:

What is a catastrophe (CAT) zone?

A catastrophe (CAT) zone refers to an area that’s known for frequent natural disasters. Think of places like Florida (hurricanes) or California (earthquakes and wildfires), the Midwest (tornadoes) Coastal New Jersey (windstorms). Properties in these areas are much harder to insure, and usually more expensive to cover.

Can you still get insurance for properties in CAT zones?

Generally, yes. If your building is well-constructed—especially with steel framing—getting coverage is still possible, even in regions where some insurers are pulling out.

But prices have gone up significantly. Policies tend to come with more exclusions, higher deductibles, and tighter terms. The increase in natural disasters nationwide is affecting rates across the board, not just in coastal states.

Even areas once considered low-risk are now seeing issues. From heatwaves, windstorms and tornadoes to winter storms, hail storms, and wildfires, extreme weather events are happening more frequently and in more places.

Inflation and future tariffs aren’t helping either. Higher interest rates, rising labor costs, and expensive construction materials are all driving up the replacement cost of buildings, which insurers factor into pricing.

Why does building age matter?

Many commercial buildings from the ’60s, ’70s, and ’80s are reaching the end of their functional life, likewise, buildings constructed prior to the 1950s are extremely difficult to insure. 

Roof condition, in particular, is getting more scrutiny. A damaged or outdated roof can result in limited policy coverage, such as Actual Cash Value, or an outright denial of eligibility, until required repairs or replacements are made. Older roofs and systems are expensive to maintain and replace, and insurers know this.

Plus, building codes have changed. What was acceptable decades ago may not meet current requirements, especially in areas that have toughened codes in response to disaster risks. ADA compliance may also become an issue.  Retrofitting older buildings to meet those standards can be costly and sometimes unrealistic. This is when Ordnance and Law coverage is desired. 

A building constructed after 2004 that meets “Miami-Dade code” requirements is more likely to get favorable insurance terms compared to older properties.

What if the building is newer but made of wood framing?

Wood framing is often chosen to keep construction costs down, but it’s not ideal for insurers. Compared to steel or concrete, wood is more vulnerable to weather damage and fire. As a result, it’s tougher to get a good insurance quote, especially in disaster-prone regions like Coastal Florida as well as other coastal states, like New Jersey.

However, a frame-built property in a less risky area like Charlotte, North Carolina, is more likely to attract coverage at reasonable rates.

Will things improve soon?

There’s no clear timeline, but improvement will likely begin with newer, high-quality properties in low-risk zones. If inflation eases and interest rates stabilize, insurers may begin expanding capacity and loosening restrictions. Eventually, more challenging locations could benefit too.

In the meantime, don’t leave your renewal prep until the last minute. Reach out to your broker early. Have them help update your property’s replacement cost using insurance carrier-approved software—property appraisers are backlogged, and lead times are longer than usual.

You should also consider a full risk assessment. Knowing where your vulnerabilities are—and taking steps to fix them—can strengthen your position in the eyes of underwriters and make your property more resilient when storms hit.

Need help with insurance coverage or cybersecurity risks?

Contact Risk Strategies ICNJ today.  Email us at info@icnj.com for guidance and to make sure your coverage is current and complete.