As California business owners grapple with rising operational costs, predatory labor codes, and the highest unemployment rate in the nation, there’s yet another challenge squeezing their budgets: skyrocketing commercial property insurance rates. Business owners are seeing their commercial property insurance rates double, triple, and, in some extreme cases in Southern California, increase by as much as 400 percent.

Why are insurance prices out of control? It’s a combination of bad luck and bad policy. California’s vulnerability to natural disasters like wildfires exacerbates the issue. But rising retail theft is also driving up costs, leaving businesses in a lurch.

I have heard their stories firsthand. Kerry Jablonski, President of Hydroform USA Inc., shared that her business was recently forced to pay three times more for building insurance compared to last year—with much less coverage. Mike Acevedo, who owns and manages multiple companies in the agriculture and commercial industries in California, shared that his businesses have suffered from a more than 400 percent increase in building and liability insurance costs.

The state has exacerbated these problems by initially refusing to let insurers price for the appropriate risk. Jamie Reid, chairman of the board at C3 Risk and Insurance Services, said the state’s “not approving rate increases, so instead of selling at a loss, insurance companies are saying we’re not going to sell the product at all.” Thankfully, state regulators are attempting to fix their earlier errors to address soaring insurance premiums.

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