Worried About the Rising Cost of Insurance?

insurance claim

The recent trend of rising insurance costs, influenced by natural disasters and inflation, is a key concern to all real estate investors. Coupled with the increasing costs of building materials and a strained property reinsurance market, property owners who grew accustomed to single-digit increases over the past decade are suddenly facing premium increases of 20% or more.

Owners of properties leased to the USPS face additional challenges due to the unique usage of their properties. In an earlier blog post, we discussed the impact of Amazon relying on local post offices for much of their last-mile distribution and the increasing incidents of Amazon vehicles damaging post office loading docks. 

USPS property owners must also consider the specifics of their lease agreements and the Postal Service’s expectations for building owners to restore their properties after they’ve been impacted by a natural disaster or some other casualty. 

Understanding these dynamics is essential for effectively navigating the insurance landscape for USPS-leased properties. 

Developments and Trends to Watch

Natural Disasters: The rising frequency and severity of losses associated with extreme weather events made 2023 the fourth consecutive year in which global losses from natural disasters are projected to exceed $100 billion. Within the United States, a record number of incidents, such as Tropical Storm Hilary, Hurricane Idalia and the Hawaii firestorm, were especially devastating. Many climate experts expect this trend will continue to disrupt the commercial property insurance market.

Inflation: The real-world costs for materials and labor continue to rise. As inflation issues persist, property owners face not only increased rates but could also encounter coverage concerns if their policies were underwritten using outdated property valuations. Owners who don’t update their property values to reflect inflation trends could receive reduced payouts and find themselves unable to repair their properties in the wake of a casualty. 

Tips for Property Owners:

  1. Conduct a thorough inspection of your properties and the surrounding area for specific risk-management concerns. While you may not be able to prevent a weather event or a negligent delivery truck from damaging your building, there are often measures that can be implemented to mitigate these risks and lower your building’s casualty profile, i.e., evaluating your roof system’s wind-resistance, installing flood barriers, protective bollards.
  2. Work with an insurance professional to begin your renewal process early. Gather as much data as possible and determine whether your policy needs to be reevaluated both in terms of coverage limits and property values.
  3. Loss Control: Insurers are increasingly looking at building conditions and loss control initiatives. Addressing carrier recommendations can make your property more attractive to underwriters. If you have a loss, report the claim as soon as possible and, where possible, take action to limit the damage caused by these claims. 

The experts at Postal Realty Trust are here to help. Please give us a call if you want to discuss how these trends will affect your specific property.