General Liability Insurance Cost in 2025: Year in Review
2025 commercial GL premiums rose approximately 6.4 percent on a full-year basis, above the 2024 figure of 5.1 percent and well above the pre-pandemic baseline of 2 to 3 percent. Six drivers compounded: social inflation, nuclear verdicts, weather and climate claims, reinsurance market hardening, medical and labour cost inflation, and litigation funding growth. The trend signals continued upward pressure of 5 to 7 percent for 2026.
2025 quarterly premium trend
Commercial GL premium growth accelerated through the first three quarters of 2025 before moderating slightly in Q4. The Council of Insurance Agents and Brokers (CIAB) commercial property and casualty market index and NAIC commercial-lines reports both confirmed the trend. Quarterly increases ranged from approximately +5 percent in Q1 to a peak of +7.2 percent in Q3, with full-year average of approximately +6.4 percent.
| Quarter | Premium increase | Driver |
|---|---|---|
| Q1 2025 (Jan-Mar) | +5.1% | Continuing 2024 hardening |
| Q2 2025 (Apr-Jun) | +6.4% | Reinsurance renewals impact |
| Q3 2025 (Jul-Sep) | +7.2% | Social-inflation pressure peak |
| Q4 2025 (Oct-Dec) | +6.8% | Marginal moderation |
| Full year 2025 | Approximately +6.4% | Above 2024 (+5.1%) and well above pre-pandemic baseline |
2025 cost increases by industry
2025 premium pressure was not uniform across industries. Construction (especially commercial), trucking, daycare, and restaurants saw above-average increases driven by social inflation and nuclear verdicts. Professional services and pure office-based operations saw smaller increases because their underlying premium base is smaller and their claim profile is less affected by the dominant 2025 drivers.
| Industry | 2025 premium increase | Primary driver |
|---|---|---|
| Construction (residential) | +7.5% to +9% | Labor-cost inflation, severity claims |
| Construction (commercial) | +8% to +12% | Nuclear verdicts in mid-commercial |
| Restaurants | +6% to +8% | Slip-and-fall severity, alcohol claims |
| Retail (brick-and-mortar) | +5% to +7% | Premises liability, theft-related claims |
| Professional services (consulting, IT, accounting) | +3% to +5% | Below average, smaller premium base |
| Daycare and childcare | +8% to +12% | Severity, abuse-and-molestation rider pressure |
| Trucking | +9% to +14% | Nuclear verdicts in transportation lines |
What drove the 2025 hardening
Six drivers compounded to produce 2025's commercial GL hardening. Each is structural rather than transient, which is why most market analysts expect continued (if moderating) upward pressure through 2026.
| Driver | How it shows up in pricing |
|---|---|
| Social inflation | Rising public sentiment toward larger jury awards drives higher claim severity |
| Nuclear verdicts ($10M+) | 2025 saw record numbers of nuclear verdicts in commercial liability |
| Weather and climate claims | Severe convective storms, flooding, wildfire claims hit record highs |
| Reinsurance renewals | Hard reinsurance market in 2025 lifted primary-carrier rates |
| Medical and labour cost inflation | Continued post-pandemic medical and labour cost growth amplifies claim severity |
| Litigation funding growth | Third-party litigation finance continues to extend case duration and increase awards |
Social inflation
Social inflation refers to the rising public sentiment toward larger jury awards in liability cases. The trend has accelerated over the past decade as juries become more comfortable with large dollar verdicts, plaintiff attorneys become more sophisticated at jury selection, and litigation-funding sources become more willing to finance the longer cases that produce the largest verdicts. 2025 saw social inflation pressure peak in commercial liability, particularly in mid-commercial construction and transportation litigation.
Nuclear verdicts ($10M+)
Commercial liability nuclear verdicts (jury awards of $10 million or more in a single case) reached record numbers in 2025. Trucking and transportation continued to lead, but commercial premises liability, healthcare, and product liability all saw record nuclear-verdict counts. Carriers price the increased nuclear-verdict frequency into base rates and into reinsurance treaties; the result is sustained primary-carrier rate pressure across affected sectors.
Weather and climate claims
2025 brought record severe convective storm losses, significant flooding events, and continued wildfire activity. Severe convective storms (hail, wind, tornado) produced approximately $40 billion of insured losses globally in 2025 per several reinsurance market reports. The GL impact is indirect (most weather claims are property, not liability), but the secondary effect on contractor PCO claims, post-storm repair fraud, and weather-related injury severity all show up in GL rates over time.
Reinsurance market hardening
The January and June 2025 reinsurance renewal cycles continued the post-2022 hard market. Reinsurance treaty rates rose 8 to 15 percent across most casualty lines, with construction and transportation reinsurance seeing the largest increases. Primary carriers passed the reinsurance increases through to commercial policyholders in 2025 renewals, which is the main mechanism by which reinsurance pressure translates into primary GL premium pressure.
Medical and labour cost inflation
Post-pandemic medical and labour cost inflation continued to compound in 2025, lifting claim severity even when claim frequency was stable. Medical inflation in particular has run above general CPI for several years and shows no sign of moderating. Labour cost growth (relevant for property-damage remediation and replacement cost calculations) similarly continues to push claim severity higher.
Litigation funding growth
Third-party litigation funding (where investors finance plaintiff lawsuits in exchange for a share of any award) continued to grow in 2025. Litigation funding extends case duration (because plaintiffs do not face cash-flow pressure to settle) and increases award sizes (because funders push for larger awards to recover their investment). The cumulative effect on commercial GL is meaningful and is reflected in carrier rating models.
State-by-state 2025 movement
State-level 2025 premium trends reflected both the national drivers and state-specific factors (tort reform, litigation environment, weather exposure). The table below summarises typical 2025 commercial GL premium movements across the largest states.
| State | 2025 premium increase | State-specific driver |
|---|---|---|
| California | +8.5% to +11% | Wildfire impact, social inflation, no tort reform offset |
| Florida | +4% to +7% | Below average; HB 837 reform began moderating claim costs |
| Texas | +5% to +8% | Roughly average; energy-sector premium pressure |
| New York | +9% to +13% | Scaffold-law claims, NYC litigation environment |
| Illinois | +7% to +10% | Cook County litigation environment, nuclear verdicts |
| Pennsylvania | +5% to +8% | Roughly average |
| Ohio | +4% to +6% | Below average; tort reform context |
What 2025 means for 2026 renewals
Three reasonable expectations for 2026 commercial GL pricing based on the 2025 trend.
Continued upward pressure of 5 to 7 percent
The drivers that produced 2025's hardening (social inflation, nuclear verdicts, weather, reinsurance, medical and labour inflation, litigation funding) are structural and will continue into 2026. Most market analysts expect continued commercial GL premium growth of 5 to 7 percent for 2026, moderating slightly from 2025 but still above the pre-pandemic baseline.
Industry concentration continues
Construction (commercial especially), trucking, daycare, and high-foot-traffic hospitality will continue to see above-average increases. Professional services and pure office-based operations will continue to see below-average increases. Operators in the affected industries should plan for renewal premium increases of 8 to 12 percent and should adopt the renewal-preparation tactics that limit exposure.
Some state-level moderation, others continued pressure
Florida and possibly Ohio may see further moderation as tort reform continues to flow through. California, New York, and Illinois will continue to see elevated pressure. Texas and Pennsylvania will continue near national averages.
How to prepare for 2026 renewals
- Document operational safety improvements and claim-management protocols for the underwriting cycle. Carriers consistently discount renewals 5 to 10 percent for credible operational files in a hard market.
- Verify class codes match operations precisely. Rating-class drift in a hardening market costs more in dollar terms than in a soft market.
- Consider raising deductibles from $0 or $1,000 to $2,500 or $5,000 to absorb some of the premium pressure. Typical savings: 8 to 15 percent.
- For high-frequency claim industries, consider $1M GL plus an umbrella structure rather than $2M / $4M direct. The umbrella math is increasingly favourable in a hard market.
- Shop annually across at least three carriers including specialty markets where applicable. Same-risk pricing spread is wider in a hardening market and can reach 25 to 40 percent across carriers.
- Bundle GL with workers comp, auto, and other lines where possible. Multi-line discounts hold value in a hard market and reduce administrative overhead.