Now is the time to talk to your agent about the impact these challenges are having and how they are affecting your business.
Why are insurance costs going up?
Several factors are contributing to the rising costs of insurance premiums for all clients, including:
- Inflation issues: Inflation has been a prevalent issue across all lines of commercial insurance over the past few years and has played a major role in rising premium costs.
- Supply chain disruptions: Since the onset of the COVID-19 pandemic, a range of supply chain disruptions have taken place. In addition, congestion at global ports, geopolitical conflicts, rising fuel and energy costs, extreme weather events, and an ongoing shortage of warehouse workers and truck drivers have slowed shipment and delivery times for several high-demand goods. These supply chain disruptions have impacted multiple types of construction materials, thus delaying building and structural repairs and prolonging related commercial property insurance claims. While some of these costs have come back down, they are nowhere near where they were pre-pandemic.
- Labor shortages: The last few years have seen widespread labor shortages. Many employers have increased their workers’ wages to help minimize these shortages. Despite offering higher salaries, the Associated General Contractors of America reported that nine out of 10 contractors have still struggled to find skilled employees, giving them no choice but to delay projects. These labor challenges have resulted in construction projects becoming increasingly expensive and taking longer to complete, driving up associated commercial property insurance costs.
- Property replacement costs: The culmination of inflation issues, supply chain disruptions, and labor shortages have made buildings, other structures, and their contents far more expensive to replace following large-scale property losses. As material and labor challenges persist, rising replacement expenses are likely to follow suit, contributing to elevated commercial property costs.
- Reinsurance challenges: Reinsurance is when your primary insurance carrier transfers some of the risk to another insurer to provide protection against your primary carrier. Reinsurers have grown more selective in how much risk they are willing to take on. In addition, natural disasters have caused substantial losses, making it even harder for reinsurers to maintain their coverage offerings, especially for lower premium rates. Some reinsurers have consequently begun limiting their capacity for these exposures or eliminating capacity altogether, all while rates continue to surge.
- Catastrophic losses: Natural disasters (e.g., wildfires, hail, tornadoes, hurricanes, and winter storms) often cause severe losses, and the rising frequency and severity of these catastrophes have continued to pose concerns in the commercial property insurance market.
Who are the rising insurance costs affecting?
Business owners who have filed claims are getting the worst of it, but everyone is paying for the rising costs. The surge in insurance premiums has a direct and notable impact on campground and RV park owners.
Insurance works best when many pay the premiums so few can have claims. What happens when the cost of claims that are filed exceeds the premiums paid? Premiums go up for all clients.
What do I do about the rising cost of my insurance premium?
It is important to understand the relationship your agent has with your insurance company. Utilizing the expertise of insurance agents who specialize in the outdoor recreation industry can be beneficial. These professionals can help operators navigate the insurance landscape, identify cost-saving opportunities, and negotiate better terms with insurers.
Another proactive thing to do is to consider the following questions:
- Which insurance companies does your agent have access to for campgrounds?
- Are they admitted or non-admitted, and what coverages would be affected by this?
- Are there other agents who have access to other insurance companies?
Where can I save money?
While rising insurance premiums pose a challenge for campground and RV park owners, there are several effective steps you can take to mitigate these costs without compromising safety and coverage.
- Pay-in-full discounts: you may qualify for a discount by paying your total premium in one lump sum rather than making monthly payments.
- One of the most proactive things you can do to address your costly premium is to review your insurance coverage and assess whether it aligns with the current needs and risks of your campground or RV park.
- Request a quote from a different carrier every five years. It’s essential to shop around and compare quotes from multiple insurers to find the most cost-effective solution that suits your specific needs. At Leavitt Rec, we have access to multiple insurance companies and can do the shopping for you.
- Consider self-insuring. Self-insuring can be done in a couple of ways if your bank will allow it. All buildings can be self-insured or only self-insuring smaller or inconsequential buildings and keeping insurance on the critical buildings needed to operate the campground. Keeping liability coverage is still a good idea to maintain legal protection.
When can I make a change to my insurance policy?
You can make changes to your policy anytime. Talk to your agent and account manager regularly to discuss coverages. This meeting can take some time, so if your renewal happens during your busiest season, set up some time in the off-season to jump on a call and review your policy line by line.
How can Leavitt Recreation & Hospitality Insurance help?
Leavitt Recreation & Hospitality (LRHI) was founded in 2006 after acquiring another agency and has continued to be one of the leading RV park and campground insurance agencies with clients in all 50 states and insuring over 3,500 RV parks.
LRHI is well positioned with access to good insurance markets and effective solutions. Our agency offers insurance solutions to a wide range of niche industries, including horseback riding, cattle drives, pack trips, zip lines, glamping, paintball, ATV and e-bike rentals, shooting and archery sports, white water rafting, and other adventure activities offered at the finest RV parks and campgrounds.
If you have questions, contact an LRHI agent near you today!
