Insurance costs for multifamily property owners increased significantly last year and have continued to escalate in 2020, making a difficult time even tougher for landlords.
“In 2019, [property insurance] rates went up 10% to 40% in multifamily,” says Garrett Maloney, vice president at TBM Multifamily, a national insurance brokerage. “Many in the industry thought that carriers were taking the rate that they needed in 2019. In 2020, we’ve also seen an increase in rates of about 10% to 40% so it’s compounded the issue.”
Insurance premiums for apartment properties have increased more than other real estate sectors, according to insurance experts.
A key reason is insurers have seen big losses in their multifamily business. On the property side, hurricane- and hail-related losses have risen. There have been large losses on the liability side with property owners being found liable for different crimes and events that have occurred on their properties.
“Carriers are either leaving the market entirely, or, if they stay in, they’re doing their best to cherry-pick best-in-class portfolios and raise rates,” Maloney says.
Waterton, a large market-rate apartment owner, has seen a minimum of 10% to 20% increases in property insurance across its portfolio, according to Erin Ankin, general counsel.Ankin and others expect to see similar increases going into 2021.
