Navigating Multifamily Insurance Challenges

In many cases, insurance premiums have doubled or even tripled, driven by rising claims, increased natural disasters, and tighter underwriting standards.

One of the most significant changes is that many carriers are now only offering Actual Cash Value (ACV) policies instead of Replacement Cost coverage. This means owners are reimbursed for the depreciated value of damaged property rather than the full cost to rebuild, leading to potential gaps in coverage during major losses.

To make matters more difficult, many insurance carriers now require full property inspections before issuing or renewing policies—something that wasn’t common practice before. Adding to the challenge, State Farm, once a major player, is no longer insuring buildings 30 years or older, leaving owners with fewer options and more expensive coverage.

These escalating insurance costs are now directly impacting multifamily asset values.

Since insurance is a key operating expense, higher premiums reduce Net Operating Income (NOI), which in turn softens property valuations. Investors and buyers are increasingly cautious, underwriting deals more conservatively and adjusting offers to reflect the new cost realities. As a result, even well-located assets are seeing slight pricing declines.

Owners navigating this environment should work closely with insurance brokers who specialize in multifamily to explore all available carriers, policy structures, and mitigation strategies to protect their bottom line.

If you have a renewal coming up or need a new policy and want to shop for the best possible coverage, feel free to reach out to me today—I’m happy to point you in the right direction.