What’s Happening with Property Insurance?

November 30, 2022
Small model house next to keychain

The tumult of the last few years has brought many changes to the world of property insurance. The recent increase in the frequency and severity of natural disasters is causing insurance companies to change the metrics they use to calculate rates and coverage.

For a nonprofit, the property insurance market can be confusing.  Luckily, Lamb Insurance Services works exclusively with nonprofits and can help choose the best insurance provider and plan for your property and operation.

Changes in Property Insurance Underwriting

For an insurance carrier, the factors influencing the price and scope of a Property insurance policy include unexpected or unknown increases in expenses and loss rates, and unforeseen or unknown decreases in investment yields.

Our world is increasingly complex, and the factors influencing these risks have grown over the past few years. For example, the incidences of wildfires have more than doubled since 1990, driving up expenses and loss rates.

Low interest rates over the past decade, averaging between .5 and 3.8%, have challenged insurance companies’ bottom lines and caused substantial decreases in investment yields.

Most changes to the property and casualty insurance underwriting process have been superficial, with added services such as remote meetings and high accuracy AI-based rate calculation becoming more widespread as the price of the technology used for AI decreases. These changes further complicate an already complex market.

Basics of Property Insurance

Understanding how property insurance works can help you know what coverage you need and what policy is right for your organization.

What is property insurance? What is covered? How does it work?

Property insurance is a form of insurance that covers various forms of property in case of damage or loss.

Generally, it covers two types of damage: Named Perils and Open Perils. Named perils are events like fire, flood, lightning, or theft that are detailed explicitly in the insurance policy. Open perils are events that are too rare to name but still covered, like nuclear explosions, terrorist acts, or war.

A property insurance policy details the elements covered by the insurance company when loss or damage occurs. It also describes potential reimbursement amounts and policy coverage limits for replacement or repair.

Generally, insurance payouts come in one of three ways:

•  Replacement costs cover the repair or replacement cost of property no matter how much the value might have changed since the policy was issued.

•  Actual value payments cover the cost of repair or replacement but at a reduced amount due to depreciation.

•  Extended cost payments cover repair or replacement with the property value appreciation factored in.

What is a commercial property insurance plan?

Commercial property insurance covers commercial properties from both named and open perils, ranging from fire and theft to terrorism and war. It is available for many types of businesses, including nonprofits.

nonprofits are a unique type of business with distinct insurance requirements compared to a standard company. For example, if the nonprofit operates in an unstable or dangerous area or a location with increased rates of arson or theft, the insurance policy must cover the increased risks or perils.

Lamb Insurance Services helps nonprofits find the right property and casualty insurance plan that caters to your nonprofit’s needs, ensuring that properties are covered from risks including damage to buildings, property theft, financial theft, or damage or theft of a client’s property.

How are commercial property insurance rates determined?

Commercial property insurance rates are determined by examining whether the company wants full or partial coverage. It also includes factoring in three potential mitigating factors:

•  The location of the commercial property, particularly the value of the property and the risk of damage or loss in the area, affect the rate.

•  The type of business, because commercial properties have different rates based on their use. Retail shops and restaurants at higher risk of theft or damage differ from a nonprofit or a law office.

•  Materials, construction, and age affect the insurance policy rate. Fire-prone materials like aging wood can increase your rate, while a structure built with updated materials and techniques can offer a lower rate.

Property and Casualty Insurance Underwriting Process

An insurance company follows several procedures to underwrite a property and casualty insurance policy.

An insurance agent reviews the company and its property to understand the scope of insurance coverage and potential risks. Then the agent inspects all potentially insured property to assess the current state of repair.

They may take photographs of the structure in case a claim is filed later. Then they determine the policy’s terms, conditions, and price by factoring in the property to be insured and the potential perils that might affect the property.

How to Get Property Insurance

Purchasing property insurance coverage can be a complex process for nonprofits. The unique nature of nonprofit work creates a specific range of risks and properties to insure.

If your organization struggles to find the right commercial property insurance plan, or you can’t get the coverage you want, work with a nonprofit-specific insurance brokerage company like Lamb Insurances Services. Lamb works exclusively with nonprofits and gears its entire operation toward helping this particular class of organizations find the right insurance policies for their needs.

Lamb can help nonprofits of any size with property, casualty, and risk management solutions at various price points. Contact us today to learn more about how to get property insurance for your nonprofit.

Lamb recognizes that COVID-19 has created many challenges for nonprofit and human service organizations. That’s why we’ve made it EASY for you to submit changes to payroll for your workers’ compensation policy and vehicle schedule for your auto policies. Click below to proceed with your change requests.