Insuring Your Business in Utah: 3 Factors to Consider

As of May 2023, U.S. News & World Report ranked Utah as the “Best State” in the country based on economic outlook, fiscal stability, and employment and growth rates. 

These qualities that make the state such a favorable place to live have also landed it in a top five spot on the list of best states for new businesses. Experts cite that one in every 61 Utah startups backed by venture capital reach “unicorn status”—a term used to define those privately held startups that exceed $1 billion in value. Even smaller businesses have found success in Utah, with almost 334,000 small businesses employing 45.2% of residents as of last year.

“It’s a very business-friendly economy,” says Julie Cooper, Utah Territory Sales Manager for Central Insurance. “As far as getting business licenses and operating a business here, it’s really employment friendly. It’s a right-to-work state.”

Whether you’re already a Utah resident opening a new business or considering moving your existing business to the area, it’s important you take the time to learn about the unique factors that impact insurance rates in this state.

Read on to uncover the five most significant factors, and learn how working with the right insurance carrier can put your mind at ease.

Factor #1: Severe Weather Risks

Severe weather risks can have a huge impact on a business’ property insurance rates. That’s because states with severe weather risks will often experience more damage to commercial property than states without, resulting in the need for more coverage.

As Utah is the twelfth largest state in America, there are vastly different weather concerns depending on the area. The Wasatch Front region, for example, is a metropolitan area of multiple towns and cities with mountains on both sides. The majority of businesses and residential areas are within an enclosed valley, protecting them from most catastrophic weather events.

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“We don’t really have tornados, hail, or high winds in this area because the mountains block them,” Cooper says. “But there are also businesses and communities located up in the mountains or right on the edge, and those are more at risk.”

Specifically, these risks include wildfires and mudslides, which can cause severe damage to properties when exposed.

Utah residents should be on the lookout for other severe weather risks, including high winds, avalanches, landslides, and earthquakes. 

Being aware of the types of severe weather risks your area is most prone to and ensuring your property is adequately covered against those risks is crucial when setting up a business in Utah.

Did You Know: Public policies in Utah are designed to help mitigate
severe weather-related risks that might be the result of climate change. According to a radio interview with John Pike, commissioner of the Utah Insurance
Department, legistlaors are in discussion with the Department of Natural
Resources, fire chiefs, and leaders of cities and counties across the state to find efforts they can support to reduce the risk of these natural disasters.

Factor #2: Congested Roadways and Fleet Management

According to the U.S. Census, the population in Utah increased to 3,417,734 in 2023—a 1.1% increase since 2022. This growth rate has resulted in Utah ranking tenth for absolute population growth compared to all other states.

Cooper has witnessed this population growth firsthand and is already anticipating how it will impact businesses in the long run. 

“There’s a lot of expansion in Utah and it’s limited to a few very specific areas. Business owners need to think about that added congestion, what it will mean for traffic, and how these factors will influence their commercial insurance rates.”

Research shows that accidents increase in severity and frequency in more congested or densely populated areas. Insurance carriers must often increase their commercial auto rates to prepare for an increased number of accidents and ensure policyholders are fully covered in case of a loss.

Businesses that operate fleets of vehicles will likely be most impacted by these growing congestion rates, as their vehicles will see the most time on the road and the most exposure to risk. 

To combat the increased likelihood of an accident on the road, Cooper suggests commercial auto policyholders explore some loss control practices for reducing risks, such as telematic or driver safety programs.

“We’ve had a lot of our Utah business policyholders express interest in our driver safety programs because, in many cases, they can lead to discounts on their rates,” Cooper says. “We’ve even been able to step in and help set up those programs for companies that haven’t had one before, which has made a huge impact on safety across the board.”

Learn More: Fleet Safety – How to Maximize Profit & Minimize Risk

Factor #3: Utah’s Housing Crisis and Construction Risks

Utah has been experiencing an ongoing housing crisis for the last few years, but a new legislative audit released in the Fall of 2023 found that the problem is worse than ever.

From single-family homes to apartments, auditors concluded an additional 28,000 units of housing will need to be developed each year to keep up with the state’s growth rate.

While a forecast like this can stress residents and businesses alike, the need for ongoing new developments means an influx of business for construction companies.

“When a lot of houses are being built really fast, the risk for construction defects increases,” Cooper says, adding that these defects can include any physical conditions that reduce the value of the building or endanger the health or safety of the occupants. 

For this reason, she recommends local construction companies and contractors invest heavily in general liability, professional liability, and builder’s risk insurance policies to help cover your business in the case of a construction defect-related loss.

The Central Difference

Whether you’re looking to move your business to Utah or  evaluating your current commercial policies, we encourage you to get in touch with one of our hand-picked agent partners throughout the state. Enter your zip code here to access the full list of agents in your area.

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