Search
 

What’s the impact on insurance costs from deferred real estate capital spending?

Real estate owners may find that deferring capital expenditures and maintenance will have significant repercussions on their insurance claims and costs.

By Geoffrey Pope | Updated on September 28, 2017
Deferring capital expenditures, as well as repairs or maintenance, could have the unintended consequence of increasing a property's insurance claim. (Photo: Shutterstock)

The Federal Reserve’s plan to slowly raise interest rates in 2017 could have the unintended effect of driving up property and casualty claims and insurance costs for middle market commercial real estate investors and owners.

The Fed’s decision on rates reflects a positive view that the U.S. economy is recovering and no longer needs to be supported by artificially low rates. For the real estate industry, however, there’s another side to this issue: Critically needed capital expenditures such as upgrades to heating and air conditioning systems, roofing, flooring, as well as major electrical and plumbing work could be tabled as real estate companies seek to trim costs and save money in an environment that makes borrowing more expensive.

Want to continue reading?
Become a Free
PropertyCasualty360 Digital Reader.

INCLUDED IN A DIGITAL MEMBERSHIP:

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

PropertyCasualty360

Join PropertyCasualty360

Don’t miss crucial news and insights you need to make informed decisions for your P&C insurance business. Join PropertyCasualty360.com now!

  • Unlimited access to PropertyCasualty360.com - your roadmap to thriving in a disrupted environment
  • Access to other award-winning ALM websites including BenefitsPRO.com, ThinkAdvisor.com and Law.com
  • Exclusive discounts on PropertyCasualty360, National Underwriter, Claims and ALM events

Already have an account? Sign In Now
Join PropertyCasualty360

Copyright © 2024 ALM Global, LLC. All Rights Reserved.