Jenner, owner of downtown Oakland bar Feelmore Social, signed on last year for business insurance from Berkshire Hathaway for $654 per month. The plan covered security risks, workers’ compensation and liquor liability.
But this spring Jenner’s coverage was canceled, and she was forced to switch to multiple carriers, stitching their policies together for a comprehensive plan. She’s now paying a combined total of around $1,000 per month — about a 50% increase.
The reason Jenner was dropped, she was told, is that the 94612 zip code that includes her business has a high crime score — despite Feelmore Social itself experiencing no crime incidents.
“Nothing I could do can change that,” Jenner said. Adding to her confusion, her nearby sex shop, Feelmore Adult, has not had its insurance dropped, despite being in the same area and experiencing a break-in a few months ago.
Jenner is far from alone. A half-dozen small business owners and insurance experts told the Chronicle that insurance rate increases, dropped coverage and fewer options are now common for small businesses. In many cases, the owners have not filed any claims but have still seen rates go up.
Crime is not the only reason for higher costs and less coverage, experts said. Wildfire risk, particularly in the fire-prone North Bay, is leading to an insurance crisis for homeowners and local small businesses. But there are also cost increases due to inflation, litigation risks and businesses seeking to reduce their exposure to the region.
“California cities are generally seeing fewer options” overall, said Janet Ruiz, the Bay Area-based director of strategic communication at the Insurance Information Institute, whose members include more than 50 insurance companies.
“California has had lower rates than other states. We’re catching up, the prices are going up,” she said. “Crime, theft, vandalism — those costs are all going up. … We’re seeing inflation. The cost of insurance reacts to the rest of the economy.”
Laurie Thomas, owner of San Francisco restaurants Rose’s Café and Terzo, has seen her insurance premiums soar in the past year.
Last year she said she paid $34,643 to Farmers Insurance to cover both restaurants. Even after scaling back some coverage, Thomas said she will end up paying $47,040 this year, a 35% increase. It’s the biggest insurance premium increase she has seen. And it’s happened despite no claims being submitted.
“It’s definitely not just a residential issue. It’s a small business issue,” said Thomas, who is also executive director of the Golden Gate Restaurant Association, which represents the city’s food industry. Other restaurant owners she’s spoken to have also grappled with rate hikes.
Adding to her challenges, summer business has been slow, Pacific Gas & Electric utility prices have also increased and food costs remain high.
“People are pulling back on spending,” she said. With less business, Thomas has cut around eight jobs at her two restaurants, or more than 10% of the combined workforce, since last year.
Mat Schuster, executive chef and owner of Canela Bistro in the Castro, said his restaurant’s insurance rates from State Farm have gone up around 30% in the past year. He isn’t sure why.
“It seems that everybody’s rates are going up, with or without claims,” said Schuster, who added that Canela hasn’t filed claims or had recent crime incidents. “It’s a little bit of a mystery on how insurance premiums are calculated.”
Yet, Luis Sahagun, director of external communications for Farmers, said, “Rates for business insurance are determined using a number of different variables, including the type of business being insured, historical loss trends, the cost of labor and reconstruction materials, and inflationary pressures, among others. Importantly, we continue to assert that a fundamental condition for offering coverage is that rates need to reflect the overall risk exposure we are insuring.”
State Farm agents have tried to be helpful, Schuster said, but have told him they’ve been unable to lower his rates.
Some business owners have reportedly lost coverage altogether. Bashir Naderi, owner of Cigarettes R Cheaper in San Francisco’s Richmond District, told ABC7 that his business lost insurance after repeated break-ins. It was robbed again last month. Naderi didn’t respond to requests for comment.
Decante SF, a wine bar in South of Market, had to switch insurers twice in the past two years. Costs have increased by $2,000 to $4,000 per year.
“It’s been really, really difficult,” said co-owner Simi Grewal. “I think there are just fewer carriers that want to operate with bars and restaurants.”
Last month her business was robbed twice in two days.
“It has definitely gotten significantly harder for small businesses to get insurance in the Bay Area,” said Jordan Jurow, principal of Incline Insurance and Decante SF’s insurance broker. “The options are getting more limited.”
Even in San Francisco, where wildfire risks are low, rates have jumped due to factors like the older age of buildings and, for apartment owners, the risk of tenant litigation, Jurow said. Alcohol-focused businesses like bars are also seen as riskier for insurers, he said.
The California Department of Insurance didn’t respond to a request for data on business insurance cost increases or dropped coverage.
But statewide, businesses are increasingly turning to the government-provided insurance option of last resort, known as the FAIR Plan. From September 2019 to March 2024, the amount of commercial policies — which includes small businesses along with commercial landlords — with the FAIR Plan more than doubled from 4,601 to 9,939, according to the plan’s data. In 2023, the FAIR Plan raised its commercial coverage to $20 million per property. As part of his efforts to ease the insurance crisis, Insurance Commissioner Ricardo Lara has directed the FAIR Plan to increase its limit to $20 million per building, which could stand to benefit larger developments with multiple buildings onsite.
Jurow said veteran insurance brokers are saying it’s the “craziest market they’ve ever seen.”
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