What Does Medical Office Building Insurance Cost?

A newer roof, a clean loss history, and low-risk tenants can make the risk feel small. Real estate still produces large, sometimes full-limit, claims from wildfire, wind or hail, frozen pipe water damage, and fire. When that happens, weak policy forms hurt. Build the coverage right first, then price it. This is a guide on how to do approach your insurance coverage and what it costs.

What Insurance Do Medical Office Building Owners Need?

Medical office building owners generally purchase two core policies; general liability and commercial property coverage. Here is what they cover.

Property Coverage

What it covers: Damage to your building and covered landlord-owned property from covered causes of loss (for example, fire, wind or hail, vandalism, pipe bursts, etc).

General Liability

What it covers: Third-party bodily injury and property damage claims arising from your premises (for example, a trip on a curb or a slip in a common area), plus related defense costs.

What Factors Influence Cost?

Carriers focus on construction and protection features like frame vs. masonry and sprinkled vs. not, the age and condition of the roof and building systems, the tenant mix and hours, prior losses, vacancy levels, and geography.

For example, the exact building in a high crime area versus a low crime area will have different pricing based on that risk factor alone. This underwriting extends to buildings in high wildfire areas, tornado-prone areas, coastal areas subject to hurricanes, and other risk factors.

Ways To Reduce Insurance Costs

1. Raise deductibles instead of lowering building limits. Underinsurance helps the carrier more than you; your coverage erodes faster than the premium drops. This is because coinsurance penalties will result in a % of the claim going uncovered.
2. Require tenant liability insurance + Additional Insured status for you. Their policy is the first line of defense for lawsuits, it is important to make sure they have this and add you as an additional insured on their policy otherwise your policy pays for their problems.
3. Keep records: roofing invoices, alarm/sprinkler service reports, HVAC replacements, and certificates of insurance from contractors.
4. Ask for a catastrophe model. A property‑specific report that clarifies your most likely severe losses (wind, hail, tornado, wildfire, quake, flood, etc.). Use that data to set deductibles and water limits intelligently. This puts you on a more level playing field with the data underwriters have.

Coverage Traps To Avoid

• Coinsurance penalties from underinsuring your building can lead to massive gaps in coverage. For example, if you underinsure your building by 20%, then you could be penalized 20% of any claim that you turn in. Always try to secure waived coinsurance or agreed value property policies.
• Ordinance & Law not included on your property policy can lead to issues, especially if your building is not brand new. Usually when you go to pull a permit to repair your building, an inspector will come out and tell you what you need to bring up to code when you repair the property. The problem is that insurance doesn't cover upgrades, it replaces what was broken. Ordinance & Law coverage pays for the upgrades that code enforcers require you to make when repairing the property.
• Water damage exclusions are frequently being added because these claims are becoming more common. You want a policy that has adequate limits for water damage (or ideally no limitation). Water damage claims are extremely expensive and not something you want to take a chance on.
• Roof depreciation or called "ACV" is added on many policies, but if you have a newer roof than 10 years old, you should make sure that your policy covers the roof at full replacement cost.
• Protective Safeguards endorsements give you a discount on your insurance in exchange for having certain protections (alarm systems, fire sprinklers, etc). If you accept the discount, you must install and maintain the systems or a claim can be denied if those systems weren't in place.

Real‑World Pricing Examples

Reminder: These are illustrative and reflect each building’s unique mix of construction, location, roof age, tenant profile, and deductibles. Your numbers will vary, but this is a realistic range for today’s market in similar scenarios.

Bottom Line

Medical office is a class many insurers want. With the right specs and documentation, you can secure strong coverage at a fair price. Build to the coverage standard first, then shop price. The gap between strong coverage and hollow coverage is usually small... until the day you have a claim. If you are a building owner and you want your insurance handled the right way, use the guidance above to shape your quotes, or reach out and my team can help you put the right policy in place.