What Commercial Building Insurance Actually Costs (and What Moves the Number)
Why can't I just get a straight answer on what commercial building insurance costs?
Quick answerAs a regional illustration, a basic $1 million industrial shed can cost around $4,800 a year to insure in regional Victoria, or $24,000 or more for an identical shed in Cairns. That five-times spread is the honest answer to what it actually costs: location, construction, claims history and sum insured all move the number independently, so there is no single average. A national price table flattens all of that away, and misleads almost everyone who reads it.
You have probably already seen the tables. "Small retail shop: $150 to $300 a month. Warehouse: $300 to $500." They read like they're helping. They aren't. An office risk and a commercial kitchen in an identical shed do not cost the same to insure, a building in Cairns and the same building in regional Victoria do not cost the same to insure, and a building with five years of clean claims does not cost the same as one that has had two fires. A single number, or even a range, flattens all of that away and leaves you either over-budgeting for a low-risk building or badly under-prepared for a high-risk one.
This page does the opposite. Instead of a fake number, Consolidated Insurance Brokers gives you the actual list of things that move your premium (below), a real regional comparison so you can see how far the range genuinely stretches, and what you can do to make sure the price you're quoted reflects your real risk and not someone else's out-of-date paperwork. If you just want the short version for your specific policy type, the commercial building and commercial property pages both carry a compact worked example.
See the worked example for a commercial building · See it for a broader commercial property policy
What actually decides how much a commercial building costs to insure?
Quick answerSeven things: what the building is made of, what happens inside it, where it is, whether it sits vacant, your claims history, how accurately your sum insured is set, and the excess and cover choices you make. Insurers price the likelihood and size of a claim, not the building's age or your postcode alone, and construction type is the factor most owners underestimate.
Construction. This is the factor that surprises owners most. Expanded polystyrene (EPS) panel and sandwich panel construction, common in cool rooms, food processing and some older industrial sheds, is one of the biggest red flags on a commercial property risk. Most insurers on the Steadfast Client Trading Platform business pack panel decline to quote once EPS or sandwich panel makes up 20% or more of a building's floor area; some will occasionally go further. Genuine specialist markets exist beyond that point, but they aren't listed publicly, which means the difference between a workable premium and no quote at all is often a phone call to a broker who knows which specialist agency to ring, not an extra field on an online form.
Occupation and tenant activity. A commercial kitchen, a spray-painting workshop or a business handling flammable stock costs more to insure than an office or a consultancy in an identical shed, because the fire and damage risk is genuinely different. This is fair pricing, not padding, but it does mean the policy has to describe what actually happens inside the building. An out-of-date occupation description on the policy can mean you're either paying for a risk you no longer run, or worse, that a claim gets challenged because what happened doesn't match what's on file.
Location and catastrophe exposure. Cyclone and flood exposure genuinely change the market available to you, not just the price within it: some insurers won't quote at all in the cyclone-exposed north of Queensland and Western Australia. This shrinks competition exactly where you need it most, which is why a broker with a full panel, and access to the specialist northern markets that don't advertise, matters more here than almost anywhere else in the country. (More on what actually happens to premiums in the north, with real figures, below.)
Claims history. Insurers typically look back five years. A clean history, even on an older building, pulls a premium down; recent claims, especially ones that suggest an ongoing maintenance issue rather than a one-off event, push it up. This is one of the few factors genuinely within your control between renewals. Fixing small issues before they become claims is cheaper than the premium loading that follows a pattern of them.
Sum insured. The bigger the number a building is insured for, the bigger the premium, which sounds obvious until you realise it cuts both ways: a sum insured that's too low doesn't just risk your payout at claim time. It also means any premium you're quoted today is being calculated against the wrong number, so a "cheap" premium on a stale sum insured is not a saving at all (more below). Here is why that matters at claim time, not just at renewal: insure a building for half its true rebuild cost, and an 80% co-insurance clause scales a partial-loss claim down in the same proportion, so the further your sum insured sits below what the clause requires, the less of a partial claim you're paid. (A total loss works differently: the full sum insured is paid, and any gap to the true rebuild cost is yours.) The exact maths behind that is worked through step by step in the co-insurance clause explained, and the complete underinsurance picture is in our underinsurance guide.
Excess structure and optional cover. Every optional section you add, flood, glass, machinery breakdown, and every excess level you choose moves the premium, sometimes more than owners expect. This is genuinely within your control, and how to use it without cutting the cover that actually matters is covered below.
Vacancy. An empty building is a bigger risk than an occupied one: there is no one there to notice a leak, a break-in or a small fire before it becomes a big one. On the small business policies Consolidated Insurance Brokers usually places, full vacancy cover is commonly standardised around 90 days, and the key underwriting question is whether 50% or more of the building is vacant; a multi-tenancy building that stays more than half occupied is generally not treated as vacant, so the clause would not bite. Telling your insurer about a change in tenancy during the year, rather than waiting for renewal, is how you keep this driver working for you instead of against you.
For the general version of this list, see the rating factors FAQ on our commercial property page; this page goes further on construction type and cover choices specifically.
Is there a standard price per square metre for commercial building insurance?
Quick answerNo, and there shouldn't be. Seven independent factors, construction, occupation, location, vacancy, claims history, sum insured and cover choices, each move the premium on their own. Two buildings that look identical on a floor plan can have completely different, and completely correct, prices once those seven factors are applied to each of them separately.
Take two identical 500 square metre sheds, same age, same street. Put a bookkeeper in one and a panel-beater with a spray booth in the other, and the premiums diverge before location or claims history even enter the picture. Now put one in regional Victoria and one in Cairns, and they diverge again, independently. A single per-square-metre rate can't survive that many independent variables; it either overstates the low-risk building's price or, more dangerously, understates the high-risk one's, right up until the day it doesn't.
How much can the same type of building cost to insure in different parts of Australia?
Quick answerEnormously. As a regional illustration only, a basic $1 million industrial shed might run around $4,800 a year to insure in regional Victoria, while an equivalent shed in Cairns can run $24,000 or more, largely because of cyclone exposure. These are illustrative figures, not quotes, but the gap is real and it's driven almost entirely by location.
That is roughly a five-times difference for what could be the same floor plan, the same age, the same tenant. It's not because Cairns insurers are gouging; it's because a cyclone-exposed roof genuinely costs insurers more to cover, and fewer insurers are willing to carry that exposure at all, which reduces competition on top of raising the underlying risk price.
Two things are worth knowing if your building sits in cyclone-exposed northern Queensland or Western Australia. First, the Australian Government's cyclone reinsurance pool, run by the Australian Reinsurance Pool Corporation (ARPC), sits behind small business property policies with a total sum insured of $5 million or less across all locations on the one policy, specifically to take some of that cyclone cost back out of northern premiums. If your building, or your portfolio of buildings on one policy, sits near that $5 million line, that is exactly the kind of thing to raise with your broker rather than assume either way.
Second, the pool appears to be doing what it was built to do. The ACCC's own monitoring found small-business premiums in high-risk areas falling by up to 31% within two years of an insurer joining the pool, with real examples including falls of 28% for Townsville strata, 19% in Mackay and 17% in Cairns (2025). If your northern premium hasn't moved in that direction, or hasn't moved at all in a couple of years, that's a conversation worth having, not a price to accept as fixed.
Rates are falling, so why isn't my premium?
Quick answerBecause "rates falling" and "your premium falling" are two different things. Insurers have been cutting the rate they charge per dollar of cover, but if your sum insured also went up this year, for example after a valuation corrected a stale figure, a lower rate applied to a bigger number can still land on a higher premium than last year's higher rate applied to a smaller one.
Start with what's actually happening in the market. Commercial property rates across the Pacific region, which includes Australia, have been falling for three consecutive quarters, down around 14% in early 2026 on Marsh's Global Insurance Market Index, the steepest fall of any region worldwide. Insurers are genuinely competing again, especially for well-maintained buildings with clean claims histories.
So why doesn't every renewal come in lower? Two numbers decide your premium: the rate, and the sum insured it's applied to. A softening market moves the first number down. But if the second number moves up in the same year, because construction costs pushed your rebuild figure higher, because a fresh valuation corrected a sum insured that had drifted below the true cost, or simply because you added a section of cover you didn't have before, the total can still rise even though the rate you're being charged genuinely fell. That isn't the insurer working against the market softening; it's the same softer rate being asked to price a bigger risk.
This matters because it cuts against a very natural assumption: that a rising premium always means an insurer is charging more for the same thing. Sometimes it does, and that's exactly when it's worth testing your renewal against the market rather than accepting it (see below). But a rising premium can also simply be the price of finally insuring the building for what it would actually cost to rebuild, in which case the honest response isn't to resent the increase, it's to have asked why the number was too low the year before.
My commercial building premium doubled and nothing changed. Why?
Quick answerOften because the insurer's own position changed rather than yours. An insurer that has spent several years pricing under the rest of the panel to win business has to correct when that book turns, and in our experience the correction arrives all at once, on renewals that have done nothing to earn it. The industry calls it remediation, and it is one of the reasons a premium can double on a building with no claims and no change to the sum insured.
Here is a real example from our own book, with the insurer unnamed. A $3 million commercial building renewed at $4,802.78 with a $500 excess. The following year the same insurer offered renewal at $8,497.92 for exactly the same sum insured. Nothing about the building had changed and there had been no claim. What had changed was that the insurer had spent several years pricing below the rest of the panel, and was now putting its rates back where it needed them. We took the renewal to the client with an option attached: lifting the excess from $500 to $5,000 took $858.22 off the premium, and they took it.
Now the part that makes this worth understanding rather than just worth resenting. Even at double the previous year, that insurer was still the cheapest quote on the panel. The only way anybody can know that is to test the whole panel, which is what a renewal is for. A doubled premium is not proof you are being overcharged, and a premium that has barely moved is not proof you are not. Both are just numbers until somebody puts them next to the alternatives.
What can be done about it depends on what is actually driving it, which is why the answer starts with a market test rather than with a phone call to the incumbent. Sometimes there is a better home for the risk. Sometimes there is not, and the honest answer is that the correction is the market and the only levers left are the excess and the structure of the cover. Saying so is part of the job.
Could a cheap commercial building insurance premium mean I'm underinsured?
Quick answerIt's one of the more common ways underinsurance hides in plain sight. If your sum insured hasn't been checked in a few years while rebuild costs kept climbing, your premium looks lower because the insurer is pricing a smaller number than what your building would actually cost to rebuild, not because you found a genuinely good deal.
A premium is only ever a percentage of the sum insured, so a low premium and a low sum insured look identical from where you're standing, even though only one of them is a problem you want. The way to tell the difference is not to stare harder at the invoice, it's to know whether the number the premium is calculated against would actually rebuild your building. We cover exactly how that gap opens up, and what it costs you at claim time, in our underinsurance guide and in how the co-insurance clause actually pays out. The short version: we commission a desktop building replacement valuation at no cost to you, carried out by a registered valuer, so the number your premium is based on is a professional's figure rather than a guess that happens to look cheap. The desktop valuation is commissioned for our purposes as your broker, to inform the advice we give you.
How can I lower my commercial building insurance premium without cutting cover that matters?
Quick answerThree genuine levers exist: taking a higher excess where it actually saves meaningful money, having your policy properly tested against the market rather than automatically renewed, and fixing the real risk factors insurers price, particularly roof condition. None of them involve insuring for less than your building is actually worth.
The excess trade-off. A higher excess is a cost you might pay once, at claim time; an underinsured building is a cost you'll definitely pay at the worst possible time. Raising your excess by an amount you could genuinely absorb if you had to is often a sound trade for a lower premium. Cutting your sum insured to save the same money is not a trade, it's a bet against your own building.
Market testing, properly. A renewal that arrives looking the same as last year's is not evidence your price is competitive, it's evidence nobody took it back to market. As Steadfast members, we run eligible business pack risks across the Steadfast Client Trading Platform business pack panel, currently up to 9 insurers, plus a CGU padlock quote where it's competitive, so your renewal is tested against real, current appetite rather than rolled over on the strength of last year's number.
Fixing the risk, not just the price. Some of what drives your premium is genuinely in your control between renewals: documented maintenance, a clean claims record, and a roof that isn't quietly deteriorating. We run more than 1,200 aerial roof condition checks a year across our client base, because a roof problem found and fixed before renewal is both cheaper to repair and a better story to tell an insurer than one discovered at claim time. More on that in roof condition monitoring.
None of this is about chasing the cheapest number on the market. It's about making sure the price you pay reflects the risk you actually carry, properly tested, on a building insured for what it would really cost to rebuild.
Get your commercial building insurance properly reviewed
Or call us on 07 3292 1111 and ask what's actually moving your number.
FAQ
Why do different insurers quote such different prices for the same commercial building?
Because the building is only half of it. Your own information sets the starting point: construction, what happens inside, location, vacancy, claims history and how accurately the sum insured is set. Each insurer then prices that information against what it has actually paid out on buildings like yours. One that has had a run of those claims will generally still be rating them hard years later, while one that has written few of them sees an ordinary risk, and on top of all that, each insurer has its own appetite, its own reinsurance bill and its own targets for the month it is quoting in. On one real Consolidated Insurance Brokers placement, a $1 million warehouse drew nine quotes ranging from $5,000 to $20,000, a four-times spread on the exact same building, on the same day. A claims history that is not clean widens the spread again, and not in the way owners expect: rather than a loading on your rate, the markets at the cheaper end generally stop quoting, so fewer insurers stay in the running, and a smaller field generally means a higher price. Whoever only ever sees one quote has no way of knowing where their price sits, which is exactly why testing a renewal against a genuine panel of insurers matters more than accepting the first number.
Does raising my excess actually save much on commercial building insurance?
Often yes, and it's one of the few levers genuinely within your control. The saving depends on your specific risk and insurer, so there's no universal figure, but a higher excess you could comfortably absorb at claim time is a legitimate way to bring a premium down without touching your sum insured or cutting cover you'd actually need.
Will a roof condition report lower my commercial building insurance premium?
It can, indirectly. A documented, well-maintained roof supports a clean claims history and gives an insurer confidence the building is being looked after, both of which help at renewal. More directly, finding and fixing a developing problem before it becomes a claim avoids the premium loading that follows a pattern of roof-related claims.
Is a suspiciously cheap commercial building insurance premium ever a bad sign?
Yes. A premium is calculated as a percentage of your sum insured, so an unusually low premium can simply mean the sum insured behind it is too low, not that you found a good deal. If your premium looks cheap and your sum insured hasn't been checked by a valuer in several years, that combination is worth investigating before you celebrate it.
Related reading
- Commercial building insurance: the compact cost answer and the shed worked example.
- Commercial property insurance: the broader property-pack cost answer and the market-spread point.
- Underinsurance in commercial buildings: why a stale sum insured is a coverage problem, not just a price one.
- The co-insurance clause explained: what an inaccurate sum insured costs you at claim time.
- Desktop building replacement valuation: the fix, and the primary CTA.
- Roof condition monitoring: the risk factor most within an owner's control.
- The commercial landlord's insurance guide: for landlords, who actually pays the premium via outgoings.
- Insurance terms glossary: plain-English definitions of sum insured, excess and co-insurance clause.
- Why use an insurance broker: why a tested renewal beats an automatically-rolled-over one.