Written by William Paull
Co-Founder & Account Director
On this page
- Why did my commercial insurance go up this year?
- Why did my premium rise when I have never made a claim?
- Was it something I changed, or was it the market?
- What should your broker explain?
- Should I just get a cheaper quote?
- What should I do with the renewal sitting on my desk?
- What should I look at in my renewal before the price?
- If I own the building, why does the sum insured matter more than the premium?
- If fixing my sum insured raises my premium again, why would I do it?
- If I lease the building out, can the insurance cost be part of the next rent review?
- Frequently asked questions
A higher renewal can be a hard pill to swallow, especially when you have not claimed. Here is what can affect the price and what to compare before you accept it.
Why did my commercial insurance go up this year?
Because insurers reprice at every renewal, and the price can move whatever you did. One insurer we place with says in its wording that your premium is likely to change at each renewal, even if your circumstances and the risks covered have not. It moves with the cost of claims, taxes and charges, and the insurer's own expenses.
For a building owner, a second number matters as much as the price. Across the renewals we are shown, the premium is commonly up 15 to 20 per cent while the insurer has indexed the sum insured by only 5 to 10 per cent. Indexing only moves the old figure along, so a figure that started short stays short.
Separating the change in cover from the change in price helps you compare the renewal properly.
Was it something I changed, or was it the market?
You can usually tell from the renewal itself: put this year's schedule beside last year's. If what you insure and the figures barely moved and the premium jumped, you are paying a higher rate for the same cover, which a market test can answer. If something on your risk moved, the premium can move with it, and the schedule should show what changed.
What your business does now. If you've added a vehicle, hired staff, started selling online, or moved into a bigger space, your risk has changed. A premium that rose with that change may be fair. If nobody has told the insurer, your policy is covering the business you had last year.
The excesses. A lower excess than last year raises your premium, and so does a section of cover you agreed to once and forgot. If a section no longer fits what you do, it can come off.
The building and its use. A new tenant, a change of use, a renovation, or a vacancy legitimately reprices a building. If any of those details is wrong on your schedule, you are paying for somebody else's risk. A tenant's trade can move a building premium a long way, and who pays the building insurance on a commercial property shows how far.
The sum insured. On most of the policies we place, the insurer can lift the sum insured each renewal by a price index. The new premium is then worked out on the adjusted figure. Some carry no such clause, so the figure sits where someone typed it years ago. Non-residential building construction costs across Australia have risen about 40 per cent since 2018, which is why an indexed figure can still fall behind. How construction cost increases affect your building insurance sets out the detail.
Commercial property rates have been softening, and your premium can still increase. A lower rate on a bigger sum insured can cost more than a higher rate on a smaller one. One renewal that rose with no claim and no change is worked through in what commercial building insurance actually costs and what moves the number.
What should your broker explain?
Our brokers discuss the right cover and its trade-offs, even when that means a higher price, and they respect a tight budget. That matters most on a commercial building, which is usually the largest asset a family or a business owns.
Should I just get a cheaper quote?
Get it tested, and compare the sums insured before the prices. A quote can beat your renewal by covering less, and you would find that out at claim time.
On one placement in August 2026, a $1 million warehouse drew nine quotes from $5,000 to $20,000, on the same building, on the same day. Up to nine insurers can quote a comparable business pack wording with us. At renewal we can put yours to them so you see the prices side by side, and you decide whether to move or stay. More on what that gives you, and what a broker's fee pays for, is in why use an insurance broker.
A lower price can also come from a lower sum insured, a shorter loss of rent period, a higher flood or storm excess, or a section left out. Check those differences before choosing. A lower sum insured can leave you short on a partial claim as well as a total loss.
Changing insurer can pay even if you would rather stay. The insurer that already holds your policy often will not discount it at renewal. With a good claims record, offering the same business back as new business a year later can bring a more competitive price.
What should I do with the renewal sitting on my desk?
Keep the cover in place while you look, and do not cancel anything. A renewal notice is an offer, and you can have it tested before you say yes. You could start by putting the figures beside last year's, by having the cover quoted by more than one insurer, or by finding out what the building would cost to rebuild.
If you hold several policies, you can have the renewal dates brought together, or kept apart if staggered renewals suit your cash flow.
If your broker has gone quiet, you do not have to wait for the next renewal. You can appoint us by letter to look after a suitable policy you already hold. That can happen part way through its term, without cancelling it. With us, you would normally deal with the same broker at every renewal.
What should I look at in my renewal before the price?
Look first at the number your premium is calculated against, before the price on the front page. On a business pack, that is what you insure, for how much, and whether each section still fits what you do. On a building, it is the sum insured against what a rebuild would cost today.
We can go through the policy with you in plain terms and fit it to your business. What a business pack can cover is on business insurance.
Your contents and stock. They are insured for the figure you set, and a figure set when you moved in may not cover everything on the floor today. List what is on the premises by name: the fit-out, contents, plant and machinery, electronic equipment and stock. A shortfall is easier to see that way than under the one word "contents".
Your profits cover. If your schedule carries it, it pays for the trade you lose after a fire or storm, for the period it names. Think about how long your trade would take to recover. It can be well after the repair is finished. A short period can run out before your customers come back.
If I own the building, why does the sum insured matter more than the premium?
The premium is this year's problem, but the sum insured decides whether you get your building back. Across the commercial buildings that come to us after a renewal shock, we usually find the sum insured sitting 30 to 40 per cent below what a rebuild would actually cost.
Replacement cost is what a builder would charge to put the building back today, including demolition, professional fees, and the current code. Replacement cost is not what you paid, the council valuation, the bank's lending figure, or a listing price.
You may not know how far building costs have moved. A building that looks exactly as it did five years ago can cost a great deal more to put back.
On most of the policies we place, the underinsurance test is set at 80 per cent of the building's full value. Below it, the insurer can cut a partial claim in proportion. Some policies run the test on the sum insured itself and some on a limit set 20 per cent above it, so the cut starts at different figures. On a total loss, most of the business packs we place pay up to 20 per cent above the sum insured, and the rest of the rebuild is yours. How the co-insurance clause reduces a payout works the sums through. Underinsurance in commercial buildings covers what valuers measure across the market and what the gap does to a claim.
On several of the wordings we place, the underinsurance penalty can be waived if the valuation and sum insured meet the policy's conditions.
Do you know your building's replacement cost? If your sum insured is short, you pay the shortfall when you rebuild. We commission a desktop building replacement estimate for you, free. It's worked out from aerial and street imagery rather than a site visit. We commission it for our purposes as your broker, to inform the advice we give you.
What comes next depends on the figure and on you. Where it looks right, we may tell you so. Where there is a real gap between the estimate and your sum insured, we explain it and show you the premium at more than one sum insured. Then you can see what closing the gap costs. Ask to see the working behind the estimate and you can check what it assumed.
The covers a building owner can choose between are on commercial property insurance, and the building cover itself is on commercial building insurance.
If I lease the building out, can the insurance cost be part of the next rent review?
Often, yes, on a gross lease. The cost of insuring the building properly is a fair point to raise at the next market review. On a net lease the tenant pays outgoings, so the cost largely sits with them already.
On a gross lease, the rent is the whole recovery. You carry the outgoings, insurance included, so a premium increase comes straight out of your return until the next market rent review. Your lease sets when that falls.
On a net lease, tell the tenant what changed. Explain the increase before the recovery lands, so it does not arrive as a surprise.
A tenant paying for the building insurance through outgoings has every reason to want it cheaper, and some ask for the building to be insured for less. If it burns, you carry the gap.
Your lease decides what is recoverable and when, and rent reviews are a matter for you and your property adviser. What a lease can ask of the insurance is in commercial lease insurance requirements. We can give you the numbers to have the conversation with: the rebuild cost, the cost of insuring it properly, and how far your sum insured falls short. Loss of rent and recoverable outgoings sit on commercial landlords insurance and in the commercial landlord insurance guide.
Frequently asked questions
Can my insurer raise my premium without explaining why?
Yes. A renewal is a fresh offer each year, and an insurer is not required to itemise how it arrived at the number. Consolidated Insurance Brokers can read the renewal and your schedule with you, so you see what changed first, and you are free to decline it.
My insurer indexed my sum insured, so am I not covered for the increase in building costs?
Not necessarily. Indexation is a percentage applied to whatever figure is already on your schedule, so it carries any shortfall forward. Most wordings we place still leave it to you to review the sum insured at renewal, and some carry no indexation clause at all. The rebuild cost is what tells you whether the figure is right.
Is it worth changing insurers over a premium increase?
Sometimes, when the cover matches. Commercial policies are modular, so two quotes on one building or one business can cover very different things. A cheaper premium is only a saving when the sums insured, excesses and sections of cover match.
Will reducing my sum insured bring the premium down?
Yes, and it can be the most expensive way to save money, because any shortfall lands on you when you claim. A higher excess can also reduce the premium, and it leaves the sum insured where it needs to be.
What if I cannot afford the correct sum insured this year?
We recommend insuring for the full cost of rebuilding. If the premium is more than you can afford, talk it through with us. We compare the available cover and cost and explain what a lower sum insured could mean for a claim. For a landlord, the next rent review may be when the rest of the gap closes. Some owners spread the premium over monthly instalments with premium funding, which is credit with interest. Miss or stop paying the instalments and the insurance policy can be cancelled with money still owing.
How long before my renewal date should I get a second opinion?
There is no set time. Some cover can be arranged quickly. A risk the insurer wants to look at more closely, for its trade, its condition or its sum insured, can take longer. Tell us your renewal date and what you insure, and we can work out how much time there is.