Why Did My Commercial Insurance Go Up?

If your renewal landed 15 or 20 per cent up on last year, with no phone call and no explanation, after years without a claim, you are not imagining it and you are not wrong to go looking. Here is what actually moved, and the bigger number sitting underneath it.

Written by Gina De Bonis, Account Manager · 24 min read · Reviewed by William Paull, Co-Founder & Account Director

Why did my commercial insurance go up this year?

Quick answerYour premium is two numbers multiplied together: the rate your insurer charges, and the sum insured it is applied to. Across the renewals we are shown, those two have moved at very different speeds. The premium is commonly up 15 to 20 per cent, while the insurer has lifted the sum insured by only 5 to 10 per cent. So you are paying noticeably more for a building that is barely better covered than it was last year, and the gap between the figure on your schedule and what it would actually cost to rebuild gets wider every year nobody looks at it.

Here is how it usually arrives. An envelope, or an email with a PDF attached. A number at the bottom well above the number you paid last year. No call. No explanation. Nothing in the paperwork that tells you which part of it is the market and which part is you.

Nothing about your building changed. You did not claim. You have not claimed for years. And the number went up anyway.

Consolidated Insurance Brokers takes a lot of those calls, and the first thing worth saying is that the increase is usually not one thing. 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 second thing worth saying is harder, and it is the reason this page is longer than the question deserves. 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?

Quick answerYou can usually tell from the renewal notice itself. Put this year's sum insured beside last year's. If the sum insured barely moved and the premium jumped, you are paying a higher rate for the same cover, and that is exactly the kind of increase a proper market test can answer. If the sum insured moved a long way, something on your risk changed and it is worth knowing what.

Most owners read a renewal notice for the total and never look at the middle of it. The middle is where the answer lives. 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, which means 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.

Now put the two movements side by side, because this is the arithmetic almost nobody is shown. On the renewals we see, the premium rises by 15 to 20 per cent and the sum insured is indexed by 5 to 10 per cent. Those are our own observations from the buildings that come to us, not a market average, and they describe a gap that only ever opens in one direction. 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. The Australian Bureau of Statistics put non-residential building construction prices up 4.4 per cent in the year to the June quarter 2026, and the Insurance Council of Australia said in February 2026 that construction costs have surged 40 per cent since 2020. Your building did not get bigger. Putting it back up got dearer, and it got dearer faster than your schedule was updated. The full history of that, and what it means for a sum insured set years ago, is in how construction cost increases affect your building insurance.

There is one more possibility worth naming, because it confuses almost everyone. 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?

Quick answerBecause insurance is priced on a pool, not a report card. Your clean record genuinely helps your rate, and a broker should be using it as leverage every year. What it cannot do is offset what your insurer paid out across every other building it covers. That is the honest answer, and it is the one nobody rings to give you.

Insurers are still paying for the weather of the last few years. The Insurance Council of Australia's catastrophe list puts the Queensland and New South Wales severe storms and hail of 20 to 27 November 2025 at about $2.1 billion in insured losses from 94,239 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.

Behind that sits a second cost you never see on any invoice. Insurers buy insurance of their own to cover the years when everything happens at once, and 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, and a page that invents a figure to sound authoritative is not doing you a service.

So the increase can be defensible. The silence around it usually is not.

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, checked whether the risk on it is still the risk you have, and 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, which makes the explanation matter more, not less. We remarket every client's policy each year rather than rolling last year's insurer forward, so a renewal conversation starts with what the market said rather than with what one insurer decided. If yours arrived with no conversation at all, that on its own is worth a second opinion.

Should I just get a cheaper quote?

Quick answerYes, get it tested, and check one thing before you accept a cheaper number. Anyone can beat your renewal by quietly carrying a lower sum insured. The saving is real, the cover is not, and you find out which at claim time. When quotes land a long way apart, compare the sums insured before you compare the prices.

Shopping around is the right instinct. The market genuinely does not price the same building the same way, and the spread is far wider than most owners would believe. On one real Consolidated Insurance Brokers placement, 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. If you have only ever seen one number, you have no idea where in that range you are sitting.

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, and why we remarket your policy every year rather than rolling last year's insurer forward. Testing the market is the standard service, not something you should have to ask for after an increase.

Now the part that protects you while you shop. There are only so many ways to make a commercial building look cheaper on paper, and most of them 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, and 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, so 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. Once the terms match, the lowest number in front of you really is the lowest price, and you have saved money rather than borrowed it from your future self.

Why the sum insured matters more than the premium

Quick answerBecause the premium is this year's problem and the sum insured is the one that 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. That is our own experience of the buildings we are asked to look at, not a market statistic, and almost nobody it happens to has any idea it has happened.

That last part is not a criticism of owners. It is a description of how the system works, and it is worth setting out honestly, because 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. The Insurance Council of Australia's 40 per cent since 2020 is the headline, and 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. Nothing about your property tells you what has happened to the cost of replacing it.

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. On a partial loss the payout is cut back in proportion to the shortfall, so you fund the rest of the repair yourself. On a total loss the insurer pays the sum insured, cash settles, and walks away having done exactly what the policy promised. 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.

It is worth putting our figure next to what other people measure, because the three numbers are not the same measurement and 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.

Read the three together and the useful conclusion is not that owners are careless. It is that a sum insured drifts quietly, in one direction, and nothing in the system tells you it has happened. Your bank does not check it. Your renewal notice does not check it. Indexation of a few per cent a year does not catch up with a construction market 40 per cent above 2020. 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?

Quick answerIt starts with the number your premium is calculated against, not the price on the front page. We commission a registered valuer's desktop assessment of what your building would cost to rebuild today, at no cost to you, and we send the assessment to you before we recommend anything. You check the inputs, correct anything we have wrong, and we resubmit it.

Most insurance advice arrives as a conclusion. You are handed a number and asked to trust the person handing it over. That is a lot to ask of someone who has just been quietly repriced by the last firm that had their file.

So we do it the other way around, and it is worth knowing exactly how the number is built before you are asked to act on it.

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. Every question the valuation asks is answered as accurately as the information available to us allows. 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 number does not collapse when it is examined. It moves slightly, in the direction of the facts they supplied, which is what a real measurement does and what a sales figure would not. The method is set out in full on desktop building replacement valuation.

It is not a comfortable document to read on a day that started with a price increase, and we would still rather you had it in your hands than take our word for anything.

With the number settled, the market test is the straightforward part: your risk, described accurately, in front of insurers that actually want it, every year rather than once when you signed up.

And one thing that should go without saying and often does not. If your existing cover is right and your price is fair, we will tell you that. You will have lost an hour and gained the knowledge that nobody is quietly taking advantage of you, which is worth more than most people expect.

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

Quick answerIt does raise it, and we will not pretend otherwise. A premium is a percentage of the sum insured, so correcting a number that is short means paying more, on top of an increase you are already unhappy about. The reason to do it anyway is that the alternative was never a cheaper policy. It is the same policy with the shortfall left sitting on your side of the ledger. And if the correct figure is genuinely out of reach this year, there is a way to get most of the way there without it.

Here is what usually happens between us sending the assessment and a decision being made, because the pattern is consistent enough to describe.

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.

You wake up knowing you need the certainty. The only real question left is what you can afford.

So here is the ladder, in the order we work through it.

1. The 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. If 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. Put 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. Then 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.

Two things worth knowing while you work down that ladder.

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 registered valuation. We describe that as a benefit of the wording and nothing more, because we have never seen it tested at claim time, but it is a real reason to get the number right rather than approximately right.

The gap is not money you have been saving. It is a bill you have deferred to the worst week your business will ever have. Closing it costs a small percentage of the gap, once a year, on a premium you were paying regardless. Carrying it costs the whole gap, in one hit, at the exact moment your building is a hole in the ground and your tenant is asking about the rent.

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

Quick answerOften, and it is the conversation most landlords never have. If your tenant is on a gross lease, insuring the building properly is one of the most defensible reasons for a rent increase you will ever have at a market review. If they are on a net lease and pay outgoings, the cost largely sits with them already. Either way it is a conversation worth having rather than absorbing the increase in silence.

This is where a renewal that started as a bill becomes a commercial decision, and it is the part of the process that most owners are never walked through.

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, and the cost of insuring the building to its real replacement value is a straight, evidenced, justifiable reason to move the rent at that review. It is not a difficult conversation to have either. Your tenant's own business lives in that building. They have as much interest as you do in the building being rebuildable if something goes badly wrong in it.

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. Take the sum insured as high as this year's budget allows, use the excess to buy headroom, and put the balance on the list for the next review. 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. The mechanics of 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

Quick answerBecause it is a hard conversation to have and an easy one to skip. Processing a renewal takes ten minutes. Measuring a building, showing the owner a number they will not enjoy, and working through what they can afford takes weeks and it starts with a client who has no reason yet to trust you.

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 train our brokers to do the other thing, and we are straight about why. Everything on this page, the measurement, the corrections, the overnight wait, the ladder, the lease conversation, is difficult and slow and it is easiest to attempt with someone who already trusts you. Doing it with a brand new client who rang up angry about a price is harder again.

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, and 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. We would rather be the firm that had it with you than the one that saved you an awkward phone call and left you with half a building.

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

Quick answerFour things, in this order. Find the sum insured and compare it with last year's. Check your renewal date so you are not deciding in the final twenty-four hours. Get the cover tested against a real panel of insurers rather than one. And find out what your building would actually cost to rebuild before you agree to insure it for anything at all.

1. Do 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.
2. Photograph or forward the schedule. The sum insured, the excesses, the loss of rent period and the description of the building are the four lines any adviser needs to tell you something useful.
3. Have it tested properly. Same building, same cover, real quotes from insurers competing for it. Anything that comes back cheaper on a smaller sum insured is not a quote you have been given, it is a risk you have been handed.
4. Get the rebuild number measured, not guessed. Every other decision on the page depends on it, including whether this year's increase was fair.

If you would rather have that conversation than read another page about it, call Consolidated Insurance Brokers on 07 3292 1111. We are open 8am to 6pm Monday to Friday, and if you send your details instead we will come back to you within 90 minutes. Bring the renewal notice and the last schedule; that is genuinely all we need to tell you where you stand.

Here is the smallest useful thing you can send us, and it is smaller than most people expect. 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, and 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. That question, what your policy would actually do, is the one most owners have never had answered. If you are in good shape, we will say so.

Have your renewal checked against the market

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. You are equally free to decline it. What you can do is ask for the current schedule and compare it line by line with last year's, which usually reveals whether the sum insured, the excesses or the cover itself changed. If nothing on the schedule moved and the price did, the increase is pricing, and pricing is the one thing a market test settles quickly.

My insurer indexed my sum insured, so am I not covered for the increase in building costs?

Not necessarily, and this is the gap that catches most owners. Indexation is a percentage applied to whatever figure is already on your schedule, so it inherits any error in that figure and never corrects it. On the renewals we are shown, indexation of 5 to 10 per cent is sitting under premium rises of 15 to 20 per cent, against a construction market the Insurance Council of Australia puts 40 per cent above 2020. Plenty of commercial policies carry no automatic indexation at all. The only way to know whether your sum insured is right is to have the rebuild cost measured.

Is it worth changing insurers over a premium increase?

Sometimes, and sometimes the better outcome is the same insurer priced properly once someone has taken your risk back to it with current information. What is never worth doing is changing insurers on price alone without checking that the cover matches, because commercial policies are modular and two quotes on the same building can cover very different things. Test the market on identical terms first, then decide.

Will reducing my sum insured bring the premium down?

It will, and it is the most expensive saving available to you. The sum insured is the number your premium is calculated from, so cutting it always cuts the price. It also transfers the difference straight to you: on a partial loss the payout is scaled down in proportion to the shortfall, and on a total loss you receive the sum insured and not a dollar of the gap above it. If the premium is genuinely unaffordable, a higher excess, a longer payment plan or a different insurer are all better levers than insuring your building for less than it is worth.

What if I cannot afford the correct sum insured this year?

Then we work down the ladder rather than leaving the figure where it is. Lift the excess to a level you could genuinely absorb, which brings the premium down, and put that saving into the sum insured so the building is better covered for a bill you can pay. Then close the remainder over the next renewal or two, and at your next rent review if you are a landlord. Getting most of the way there this year is a far better position than waiting until you can afford all of it.

How long before my renewal date should I get a second opinion?

Two to four weeks is comfortable. That is enough time to get a building rebuild figure back, put the risk properly in front of a panel of insurers and read what comes back without a deadline pressing on you. Less than a week is still worth doing, because cover can be arranged quickly, but a rushed market test is a shallower one and you deserve the version where every option is on the table.

Related content

Product: Commercial Building Insurance, Commercial Property Insurance, Commercial Landlords Insurance.

Client type: For Commercial Building Owners.

Cornerstone: Desktop Building Replacement Valuation, Why Use an Insurance Broker.

Learn: Underinsurance in Commercial Buildings, The Co-Insurance Clause, What Commercial Building Insurance Actually Costs, Construction Cost Increases in Australia, Why We Sometimes Recommend a Higher Excess, Commercial Landlord Insurance Guide.