Why Did My Commercial Insurance Go Up?

Why did my commercial insurance go up this year?

Until you know which of the two numbers moved, you cannot tell whether you are being overcharged or finally being charged properly, and those two situations need opposite responses.

The increase is the part you noticed. It is very rarely the part that would cost you the most.

Was it my building, or was it the market?

Three lines are worth thirty seconds each.

The sum insured on the building. Compare it with last year's. Many commercial policies index it automatically, and plenty carry no automatic indexation at all. Where there is none, the figure sits exactly where someone typed it years ago while the world moves on around it.

The excesses. A lower excess than last year raises your premium. So does a new section of cover you agreed to at some point and forgot.

The description of the building and what happens inside it. A new tenant, a change of use, a renovation, a period of vacancy. Any of those legitimately reprices a building, and any of them being wrong on the schedule means you are paying for somebody else's risk.

Indexation is not tracking the cost of rebuilding. It is softening the shape of the invoice.

The cost of rebuilding, meanwhile, has gone the other way. Non-residential building construction costs across Australia rose 4.4 per cent in the year to June 2026. That is about 40 per cent since 2018 (Australian Bureau of Statistics Producer Price Indexes, construction, released 31/07/2026). The full history is in how construction cost increases affect your building insurance.

You may have read that commercial insurance rates have been softening, which is what the published market indices have been reporting. Both things can be true at once. The rate per dollar of cover can fall while your premium rises, because a lower rate applied to a bigger sum insured can land above a higher rate applied to a smaller one. We work that arithmetic through properly, with the market figures attached, in what commercial building insurance actually costs and what moves the number.

Why did my premium rise when I have never made a claim?

Take the Queensland and New South Wales severe storms and hail of 20 to 27 November 2025. The Insurance Council of Australia puts them at about $2.22 billion in insured losses from about 95,700 claims, as at June 2026. That money does not come out of the insurer's own pocket alone. It comes out of the pool that every commercial building in the country pays into, including yours, including the one that has never had a claim on it.

Insurers buy insurance of their own to cover the years when everything happens at once. The price of that has hardened worldwide after a run of very large events. We are not going to put a number on what it adds to one Queensland building, because we do not have one we would stand behind. A page that invents a figure to sound authoritative is not doing you a service.

A renewal that arrives with no phone call is telling you something about the service, not the price. Someone should have looked at your file before that number was sent. They should have checked whether the risk on it is still the risk you have, then rung you to say what changed and why. Loyalty is supposed to count for something.

In pricing terms it counts for less than most owners assume. If yours arrived with no conversation at all, that on its own is worth a second opinion.

Should I just get a cheaper quote?

The market genuinely does not price the same building the same way. On one real Consolidated Insurance Brokers placement in August 2026, a $1 million warehouse drew nine quotes ranging from $5,000 to $20,000, on the same building, on the same day. That is one case rather than a typical result, and it is not a saving we can promise anyone. What it proves is narrower and more useful: an unshopped premium is an unverified premium. The only way to know your number is to get a quote against your actual risk.

That is why we run eligible business pack risks across the panel of insurers that subscribe to the Steadfast Client Trading Platform business pack wording, currently up to nine quotes. It is also why we remarket your policy every year rather than rolling last year's insurer forward.

There are only so many ways to make a building look cheaper on paper, and most are subtractions rather than savings:

• a lower sum insured on the building
• a shorter loss of rent period, or none at all
• a much higher flood or storm excess buried in the schedule
• a section of cover simply left out

The first one is the dangerous one, because it is invisible until the worst possible moment. The cheapest quote usually has a trick in it, and in our experience the trick is nearly always that sum insured. Most commercial wordings expect your sum insured to be at least 80 per cent of what the building would really cost to rebuild. The underinsurance clause is what happens when it is not.

On a partial loss, a storm or a burst pipe or a fire in one tenancy, the payout is scaled down in proportion to how far short the sum insured falls. You fund the rest of the repair yourself. On a total loss you are paid the sum insured in full and nothing beyond it, and the gap between that figure and the real rebuild cost is entirely yours. Two different mechanisms, one cause. Both are worked through with the numbers in how the co-insurance clause reduces a payout.

So compare quotes properly. Same sum insured, same excesses, same loss of rent period, same sections of cover.

Why the sum insured matters more than the premium

There are four separate reasons a careful person ends up here and none of them is carelessness.

Nobody has ever told you what the figure should be. A replacement cost is not the price you paid, not the council valuation, not what the bank lent against it and not what an agent would list it for. It is what a builder would charge to put that building back up, today, including demolition, professional fees and the current code. Unless someone measured it for you, the number on your schedule is an estimate somebody made once, possibly not even you.

Building costs have moved further than almost anyone outside construction realises. About 40 per cent since 2018 across Australia, on the government's own construction price indexes, is the headline. It does not feel like a 40 per cent world from inside a building that looks exactly the same as it did five years ago.

Most owners quietly assume the insurer simply rebuilds. It is a reasonable assumption and it is the wrong one. The policy pays a sum of money, and the sum is the one on your schedule. The building is rebuilt out of that money, or it is not rebuilt.

So you conclude you are fine, and nothing tests that conclusion until the day it matters. This is the part that does the damage. If that cheque will not fund a rebuild, you are standing on a cleared site with the shortfall, the finance and the decision all on your side of the table.

Our figure sits beside two others, and the three are not the same measurement, so reading them as one would mislead you.

Ask owners directly and roughly 1 in 10 Australian small and medium businesses say they are underinsured. That was the Insurance Council of Australia's own research in 2015, and Vero's 2025 SME Insurance Index found almost exactly the same figure a decade later. Measure it instead of asking, and it changes. MCG Quantity Surveyors reviewed more than 2,000 of its own valuations and found buildings underinsured by an average of 24 per cent, rising to 31 per cent for industrial property. That is every building MCG values, the healthy ones included.

What we see is a narrower and worse slice than that, and the reason is the door people come through. The buildings we are asked to look at belong to owners who have just been repriced without a conversation, which usually means nobody has reviewed the file in years. Across those buildings, 30 to 40 per cent short is what we typically find.

The deep version of what that gap does to a claim is in underinsurance in commercial buildings.

What should a proper renewal review look like?

We measure the building from the outside. Publicly available aerial and street-level imagery, the footprint, the number of levels, the roof, the construction type, the age, the standard of the finishes. It is a desktop assessment by a registered valuer rather than a site inspection, and that is exactly what we will call it. It is commissioned for our purposes as your broker, to inform the advice we give you.

Then we send it to you. Not a summary of it and not a recommendation drawn from it. The assessment itself, so you can see what was assumed about your building.

You correct it. You know things imagery cannot show: the mezzanine that went in, the switchboard upgrade, the fitout the last tenant left behind, the wall that is block and not tilt panel. Tell us what is wrong and we resubmit the corrected information for an updated valuation.

Usually the corrections move it by a small percentage. That is the part clients tell us matters most. The method is set out in full on desktop building replacement valuation.

If fixing my sum insured raises my premium again, why would I do it?

The assessment goes out. You look at it, find it is mostly right, correct the bits that are not, and send it back. Then you go to bed. And somewhere in that night the question stops being about the premium, because you know perfectly well why you buy insurance. You buy it to replace what you have. Nobody insures a building because they would like to get half a building back.

The only real question left is what you can afford.

1. 1The correct sum insured, if it is affordable. Always the first answer, and for a lot of owners it is a smaller premium difference than the night before suggested.
2. 2If it is not affordable, lift the excess. A higher excess is a known cost you pay once, deducted from a settlement, on a day the insurer is already paying you a much larger amount. It brings the premium down immediately, and it is one of the few levers entirely within your control. The trade is set out with a real example in why we sometimes recommend a higher excess.
3. 3Put the saving into the sum insured. The premium you freed up buys cover, which is the point of the exercise. You end up with a higher figure on the building and a bill you can actually pay.
4. 4Then close the rest of the gap over time. Lift it again at the next renewal, and again after the next rent review, until the schedule matches the rebuild cost. Getting most of the way there this year beats getting none of the way there while you wait to afford all of it.

We will not place a commercial building at less than 60 per cent of the real rebuild figure our desktop valuation produces. If you disagree with that figure, commission your own registered valuation and it becomes the basis instead. Be clear about what 60 per cent is, though. It is a floor to stop the worst outcomes, not full protection, because the underinsurance clause still bites anywhere below 80 per cent of value.

And on several of the business pack wordings we place, the underinsurance clause is switched off entirely where the sum insured is the full figure in a current registered valuation. We describe that as a benefit of the wording and nothing more, because we have never seen it tested at claim time. It is still a real reason to get the number right rather than approximately right.

Can the insurance cost be part of my next rent review?

On a gross lease, the rent is the whole recovery. You carry the outgoings, insurance included, so an increase in the premium comes straight out of your return. Most commercial leases run a market rent review every two to three years. The cost of insuring the building to its real replacement value is a straight, evidenced, justifiable reason to move the rent at that review.

On a net lease, you are largely insulated already. If the lease has the tenant paying outgoings, the premium increase is a cost that flows to them under the terms they already agreed. It is still worth telling them what changed and why, because a surprise recovery reads as a grab and an explained one reads as management.

If the review is not due yet, lift what you can now and stage the rest. What matters is that the gap is closing and somebody is tracking it, rather than the figure sitting untouched for another five years.

Two honest caveats. Your lease decides what is actually recoverable and when, and it is the document to read before you plan around any of this. And rent reviews have their own rules and timing, which are a matter for you and your property adviser rather than your broker. What we can do is give you the numbers to have the conversation with. What the building would cost to rebuild, what insuring it properly costs, and how far the current schedule falls short. Loss of rent, recoverable outgoings and what a lease shifts between you and the tenant sit on commercial landlords insurance and in the commercial landlord insurance guide.

Why you may not have had this conversation before

Most of the renewals we are shown were processed, not reviewed. An order taker takes the order. The insurer's number goes out with a covering email, the commission is earned, and nobody has to tell anybody anything they would rather not hear.

We do it because we have seen what the alternative costs. A commercial building is usually the largest asset a family or a business owns. We do not want to watch a client lose their livelihood because an insurance professional would not spend the time. That is not bad luck when it happens. It is a conversation somebody did not have.

What should I do with the renewal sitting on my desk?

1. 1Do not pay it yet, and do not cancel anything either. A renewal notice is an offer, not an invoice. You have until the renewal date, and cover should never lapse while you shop.

If you would rather have that conversation than read another page about it, call Consolidated Insurance Brokers on 07 3292 1111.

Send the page of your schedule that lists what is insured and for how much. You do not need to send us the price to start.

From that page alone we can usually tell which product you are on and which insurer stands behind it. From there we can pull the actual wording and read what it would and would not pay, before we talk about a number. Send the price as well if you would rather, and we will look at both. If you are in good shape, we will say so.

Have your renewal checked against the market

Frequently asked questions