Why Insurance Costs Have Increased

Navigating the Changes

Insurance costs in the CRE sector have been radically climbing in recent years, especially in the Southeast. Georgia alone has seen rate hikes in the double digits, with some areas experiencing a 31% year-over-year increase. There are multiple factors to consider that contribute to these massive insurance premium spikes. Below are the hidden, underlying drivers of CRE insurance increases, and how to mitigate them.

 

One contributing factor to the uptick of insurance premiums is rising repair costs. Due to inflation and storms, repairs have become increasingly expensive, moving the cost of insurance upwards. Secondly, the rise of crime in areas of Georgia, specifically, have influenced higher insurance. Not only has there been higher crime rates, but lawsuits tied to crime have also increased, which is why they have driven up insurance premiums. Lastly, insurance companies are not renewing policies with owners, with crime and storms being some of the primary factors. This makes it harder for owners to secure and keep favorable policies for their properties. The three factors are responsible, in part, for the abnormal insurance inflation, besides Georgia being in a higher risk zone for tropical storms.

 

While Georgia and surrounding states remain prone to the increased risk of natural disasters, this constant is not the only reason insurance is climbing for CRE owners. However, this provides an opportunity to reduce these rising premiums through the strategies discussed. Insurance proves to be a massive expense that can critically affect the quality of a deal. Yet, by performing risk audits, tightening leases, being actively and frequently on the lookout for new policies, pooling insurance, using regional brokers, and retrofitting buildings, owners can forego the aggressive hikes in insurance premiums in the Southeast.

 

Six Steps to Reduce Insurance Premiums

While insurance hikes may seem unavoidable, there are proven strategies to push back on rising premiums. Below are six steps every CRE owner should consider—especially in higher-risk markets like the Southeast.

 

1.  Audit Risks Before the Insurer Does

A property flagged as high-risk can face steep premium hikes or non-renewals, which buyers factor directly into pricing. Proactively identifying issues like roof age, deferred maintenance, or security gaps can help avoid surprise costs and present a cleaner, more attractive asset to the market.

2. Work with Brokers Who Understand Localized Risk

Insurance carriers often miss local nuances — from crime corridors to updated flood maps — that can dramatically change coverage terms. Owners who work with brokers familiar with their specific submarket often achieve better coverage stability, which in turn strengthens buyer confidence and underwriting.

 

3. Tighten Lease Language to Shift Liability

Leases that clearly define tenant insurance requirements, maintenance obligations, and indemnity provisions don’t just reduce owner exposure — they also make a property easier to finance and more appealing to institutional buyers who prioritize well-structured rent rolls.

 

4. Shop Policies Early and Track Trends

Starting the renewal process months in advance gives owners more leverage to avoid last-minute rate spikes. From a transaction standpoint, locking in predictable insurance costs before going to market can remove a major source of uncertainty for buyers.

 

5. Explore Master Policies and Group Pooling

Owners with multiple assets have successfully lowered per-property costs by grouping coverage under one master policy. Lower operating expenses translate directly into stronger NOI, which supports higher valuations when it’s time to sell.

 

6. Invest in Targeted Upgrades

Strategic improvements — like reinforced roofing, impact-resistant glass, or upgraded security lighting — can reduce insurance costs while signaling lower operational risk to buyers. These upgrades often enhance curb appeal and marketability, helping justify a stronger asking price.