Why rising repair costs should prompt a closer look at liability protection
Key takeaways
- Repair costs are rising fast: From commercial machinery to residential structures, the cost of repairs has surged — putting more pressure on outdated policy limits.
- Liability gaps are growing: Even a minor incident can lead to major costs. Regularly reviewing coverage limits, deductibles and endorsements helps reduce your clients’ financial exposure.
- Agents play a key role: Now’s the time to reassess your clients’ property damage liability coverage — especially for industries facing inflation-driven hikes.
As repair and replacement costs continue to climb across industries, it’s becoming more important than ever for insurance professionals to reassess property damage liability coverage. The cost to restore damaged property has changed significantly over the past few years, presenting both challenges and opportunities for agents and brokers.
Helping your clients stay protected means keeping pace with shifting risks and market pressures. That includes evaluating whether their current liability limits still reflect today’s claims environment.
Related: Helping your clients navigate common home insurance claims
Understanding property damage liability coverage
Property damage liability coverage is a core part of both commercial and personal insurance. It provides financial protection when an insured party is legally responsible for damage to someone else’s property. Common examples include:
- A fender bender involving another vehicle
- Damage to a customer’s home
- A third-party structure affected during operations
What makes this coverage especially critical today is how fast claim values can escalate. With the cost of repairs rising, even a small claim can create a sizable out-of-pocket expense if liability limits or deductibles are outdated. That’s where a well-structured policy — with the right limits and add-ons — can make all the difference.
What’s driving the rising cost of repairs?
Property damage claims are growing more expensive across both residential and commercial markets. For instance, the average cost of commercial machinery repair and maintenance rose over 33% from 2022 to 2025, according to the U.S. Bureau of Labor Statistics. This surge is just one part of a broader trend: as the cost to repair or replace damaged property climbs, so do the stakes. Understanding what’s fueling these increases is key to tailoring liability coverage that reflects today’s risk environment.
Extreme weather events and climate impact
A major price driver is the increased frequency and severity of extreme weather events. As wildfires, floods and tornadoes cause more widespread destruction, businesses and individuals may be held liable for third-party property losses.
Take California, for example, where development is expanding into wildfire-prone areas. A single misstep — like a commercial equipment spark igniting dry brush — can trigger multimillion-dollar liability claims. Wildfires have become so common in California that 19 leading homeowners’ insurers now limit or restrict coverage in parts of the state.
More broadly, operating in high-risk zones heightens liability exposure. With an average of 1,200 tornadoes striking the U.S. each year, businesses and homeowners face growing potential for liability claims tied to flying debris, damaged neighboring properties or unsecured construction materials.
Supply chain disruptions and material costs
Ongoing supply chain volatility has made materials harder to source and more expensive to secure. When repairs are delayed due to backorders, businesses may be forced into workarounds or prolonged downtime — driving up the total claim value. In some cases, rising material costs alone increase baseline repair expenses.
For example, drywall prices increased by 44.6% in the two years ending December 2022, and ready-mixed concrete rose by 11.2% in 2023. These types of increases directly affect the cost of property damage claims, whether restoring a building after an accident or replacing damaged infrastructure.
Labor shortages and technological complexity
The shortage of qualified repair technicians and increasing demand across industries has fueled the cost of skilled labor. As fewer workers enter the trades and seasoned professionals retire, service providers are raising wages to stay competitive, which is an expense they pass down to policyholders through higher claim values.
At the same time, machinery and building systems are becoming more advanced. From integrated sensors to smart interfaces, modern systems often require highly specialized knowledge to repair. As these technologies become more common, so does the potential for complex and costly liability claims when something goes wrong.
How agents and brokers can adapt property liability coverage
As repair costs rise and property damage liability claims grow more complex, it’s critical to revisit how coverage is structured. The following strategies can help ensure clients stay protected:
1. Reassess coverage limits regularly
Outdated liability limits may leave clients underinsured. Schedule periodic policy reviews — particularly for clients in construction, manufacturing or real estate — to ensure limits reflect today’s repair and replacement costs. Higher limits that align with current market values can help prevent surprise shortfalls at claim time.
2. Offer policy endorsements
Standard policies may not be enough to cover today’s repair and liability costs. Tailored endorsements — such as liability caps, contractor coverage expansions or pollution liability add-ons — can help close coverage gaps and reduce financial exposure.
For instance, pollution liability coverage can protect businesses from the cost of cleaning up accidental spills or leaks that damage nearby property. This added protection is especially valuable for industries like construction and manufacturing, where even small oversights can have big financial consequences.
3. Use insurance technology for smarter risk assessment
Digital quoting platforms and underwriting tools are reshaping how brokers assess risk. These tools help model client exposures more accurately and recommend liability limits that reflect real-world claim trends. In a shifting landscape, data-backed insights can lead to better-informed conversations — and better outcomes.
4. Educate clients about emerging risk factors
Part of adapting coverage is helping customers understand why they may need more protection. Whether it’s the rising price of drywall, the impact of climate change or newly imposed tariffs, they may not see the hidden costs until it’s too late. Use real-world examples, market data and claims case studies to highlight the importance of updated liability coverage.
Related: Risk management tips for home renovation projects
Staying ahead of market shifts with property damage insurance
Insurance agents play a key role in helping clients manage evolving property damage liability risks. From reassessing coverage limits to offering tailored add-ons, the steps taken today can make all the difference in how well clients stay protected — especially as property exposures grow more complex.
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This material has been prepared for general informational purposes only, is intended to apply generally rather than to any specific company and presumes appropriate discretion will be exercised regarding any particular situation.