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Do You Have Commercial Lines Property Coverage?

Commercial Lines

By – Jenn Barrett, Director of Underwriting at Hometown Insurance

Are you a business owner looking for Property Coverage or want to make sure your existing coverage is in the right place? Are you wondering what the 2023 insurance marketplace looks like regarding increases or changes to terms and conditions? Are you curious about which lines of business may have limited markets or excess capacity?

Looking back is always a great indicator of what may be to come, let’s look at 2022.


Valuation or Insurance to Value (ITV) is one of the most significant issues that influenced all property insurance areas in 2022. ITV was a primary discussion point between clients and agents, brokers, and underwriters, with carriers, and among reinsurance partners. Valuation has always been a focus as carriers seek to understand exposures and clients strive to purchase adequate limits.

Continuing supply chain pressure and nationwide post-pandemic demand surge mean the cost of building materials and labor are quickly outpacing inflation rates. These factors have increased pressure to more accurately reflect the full cost to replace damaged property, in turn driving insurance premiums upward, on top of any increased rate carriers may be seeking.

The impact of ITV reaches premiums, it also generated changes in program structure, as well as provided the basis for declinations with many underwriters. Traditional excess markets are scrutinizing reported values before signing on to any shared or layered programs. As a result, carriers are looking to impose hard caps or scheduled limits to better control volatility. For example, insurers may include a margin clause that limits an overall payout to 110% of reported values, especially when it comes to classes in more challenging sectors like recycling, habitational, or high-hazard manufacturing.

In the past, policyholders may have received recovery amounts well above stated values, but underwriters are now closely reviewing property values and cost estimates at every renewal.

Reinsurers are also pushing their cedants (a party in an insurance contract who passes the financial obligation for certain potential losses to the insurer) to better assess, manage, and price risk due to valuation concerns. This is leading to reduced capacity and increased net retention for carriers, which will put additional pressure on rates.

While insureds and their agents may initially be reluctant to raise property values on submissions, ensuring accuracy is essential for collaborating productively with carrier underwriters.

Ultimately, insurers who proactively explain their valuation and work with markets on fair compromises are able to offset what a potential rate increase would have been with the value increase, and more importantly, obtain more accurate coverage.

(1 least expensive – 5 very expensive)

• Active Assailant/Terrorism (1)

• Builders Risk (4)

• Natural Disasters – CAT Wind/Hurricane/Tornado/Tsunami (5)

• Crypto/Data Mining (4.5)

• Earthquake (3)

• Flood (3)

• Habitational/Frame Apartments (4.5)

• High Hazard Manufacturing (4)

• Sever Convective Storms/Hail (3)

• Stock Throughput (4)

• Wildfires (5)

• London Market (3)

Life is unpredictable, things happen every day. You work hard for your business and we at Hometown work hard to help you keep it properly insured and safe. Call to speak with one of our dedicated licensed professionals today to review your policy!

Your coverage matters to us, call us today for you a policy review at 1-800-568-SAVE (7283) or email us at: Hometown is here for you!  

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