2022 Climate for California Commercial Insurance Rate Increases

With today’s current climate you may be wondering how these events affect your existing insurance rates. Or you may be looking to start a business and want to get a better idea about how much your California commercial insurance is going to cost. Well, JVRC Insurance Services is here to help you answer these questions! The rates for most California commercial lines of insurance are likely to rise going into 2022. Here’s what we know:

• California Commercial Property: Rate increases will vary depending on the location of a business. Companies in areas at high risk of natural catastrophes will see the highest rate hikes. Unfortunately, some businesses will receive non-renewals and have difficulty securing coverage. Also, with there being higher rebuilding costs due to materials price inflation and labor shortages we will see higher rates for commercial property in 2022 than we did in 2021.
• California Directors & Officers, Employment Practices: Directors and officer’s public companies will see an increase of up to a 25% rate hike. Employment Practices Liability will also see increases of 10-20% along with higher retentions in California. Retaliation and sexual harassment claims, gig worker classification, the gender pay gap, and medical marijuana usage are among the top trending employment practices litigation types in 2022. Moreover, the average cost of employment-related claims is rising, along with the length of time it takes to resolve a claim.
• California General Liability: Rates are to increase modestly with higher jury and settlement awards, increased litigation, including higher medical costs for bodily injury claims. Uncertainty remains about the impact from third party COVID-19 related lawsuits will have on the industry. Although nearly all California general liability renewals will include a communicable disease exclusion if there isn’t already one on the policy. Assault and battery claims have increased in frequency and many habitational risks may see sub limits in this area or higher retentions in 2022.
• California Commercial Auto: With increasing number of accidents and deaths caused by distracted driving, higher medical costs for accident victims, and rapidly climbing repair costs for vehicles. This line of coverage is being affected by increases in both frequency and severity which has resulted in poor loss experience. Distracted driving has become more frequent, and more people are having accidents. Increased awards and settlements for bodily injury damages is also driving up loss ratios.
• California Workers’ Compensation: This line of insurance is one of the lines with the lowest rate increases. California’s workers’ compensation remains the most competitive and best-performing major property and casualty insurance line.
• California Umbrella and Excess Liability: Rates for these coverages continue to climb due to several factors, including large judgments, the cost of litigation and a rising tide of lawsuits against businesses. Insurance companies are raising prices and restricting capacity.
• California Contractors Equipment: Rates are seeing renewals with a slight rate increase. It is important to note the Equipment Floaters are valued on an Actual Cash Value basis most of the time, so make certain to schedule the values on equipment forms accordingly. Contractors don’t want to pay premium on replacement cost if they will cover the depreciated value.

If you have any questions or are interested in purchasing insurance in California, please reach out to one of JVRC’s experienced brokers!