Insurance used to be one of the boring lines in a property budget. You put last year's number in, added a few percent, and moved on to the items that actually needed thinking about. That approach stopped working somewhere around 2022, and most operators found out the hard way at a renewal.

What makes this different from ordinary cost inflation is that the increases are not smooth, not predictable from the prior year, and not evenly distributed. Two similar buildings in the same market can see very different renewals depending on construction type, loss history, and which carriers happen to be writing that risk this year.

Property managers do not buy the policy. But they control most of the inputs that determine what it costs, and almost none of them know it.

How Large the Increase Actually Is

Reliable data on multifamily insurance costs was scarce until recently, partly because homeowner insurance gets tracked closely and commercial multifamily does not. That has changed, and the numbers are worse than the anecdotes suggested.

Two sources are worth knowing, because they measure different things and agree with each other:- 

1. The Share-of-Revenue View

Federal Reserve data cited in the National Apartment Association's analysis of multifamily insurance cost acceleration shows insurance rising from 1.95 percent of multifamily revenue in 2000 to 4.78 percent by 2024. Per-unit insurance costs rose roughly 55 percent between 2020 and 2024, and 228 percent since 2000.

Share of revenue is the useful framing because it strips out the effect of rent growth. Insurance has not merely risen alongside everything else. It has taken a materially larger bite of every rental dollar than it did a generation ago, and most of that shift happened recently.

2. What Operators Report at Renewal

The Federal Reserve Bank of Minneapolis surveyed multifamily owners operating nearly 45,000 units and found annual premiums rising by an average of 14 percent from 2021 to 2022, 22 percent from 2022 to 2023, and 45 percent from 2023 to 2024.

Note the shape of that. It is not a steady climb, it is an acceleration, and it means a budget built by adding a reasonable percentage to last year's figure was wrong by a growing margin three years running.

The same survey found something arguably more important than the price: deductibles rising and exclusions widening, with owners describing policies that required careful reading to establish what was still covered. One respondent said the effort to hold costs down had included raising deductibles, maintaining properties more carefully, reducing coverage, and shopping the market. That is four different responses to one problem, and three of them transfer risk back onto the operator.

Why This Is an Operations Problem, Not Just an Owner Problem

The instinct in most management companies is that insurance belongs to the owner. They hold the policy, they pay the premium, they negotiate with the broker.

That instinct is why the problem goes unmanaged. Almost every variable an underwriter prices sits inside the operation: how well the building is maintained, how many claims it generates, how quickly water losses are contained, how accurately the property is described in the submission. The owner signs the policy, but the manager produces the risk profile.

There are three specific ways this lands on the management company rather than the owner:- 

1. It Moves NOI, and NOI Is Your Report Card

Insurance is an operating expense, so a 45 percent premium increase flows straight through net operating income and property valuation. When an owner reviews performance, they see NOI down and expense ratio up. The premium increase is the cause, but the report is about your management.

Managers who have not put the insurance line in context before the review are explaining it afterwards, which sounds like an excuse.

2. Higher Deductibles Change Maintenance Economics

This is the consequence almost nobody plans for. When a deductible moves from $10,000 to $50,000, a whole category of loss that used to be an insurance claim becomes an operating expense.

That changes what preventive maintenance is worth. A supply-line replacement programme that looked marginal when the insurer absorbed water damage looks obviously correct when the first $50,000 falls on the owner. The Minneapolis Fed survey found owners actively avoiding filing claims, which means the effective self-insured layer is larger than the deductible suggests. Your maintenance thresholds should move accordingly, and in most portfolios they have not.

3. Coverage Is Shrinking, Not Just Repricing

Exclusions, sub-limits, and higher retentions mean the same premium buys less than it did. In catastrophe-exposed states, carriers have withdrawn entirely, pushing operators toward state-backed programmes with narrower coverage and higher costs.

The practical implication for a manager is that you cannot assume last year's coverage still applies. Somebody has to actually read the renewal, and if nobody in the management company does, the first person to discover a new exclusion will be whoever is handling the claim.

What a Property Manager Actually Controls

You cannot influence reinsurance pricing or catastrophe modelling. You can influence how your portfolio is underwritten, and that is not a small lever.

Underwriters price uncertainty. A submission that arrives late, incomplete, and with vague answers about maintenance and loss control gets priced for the worst plausible interpretation of the gaps. A submission that arrives early, complete, and evidenced gets priced closer to the actual risk. The difference between those two outcomes on the same building is real money, and it is entirely within the management company's control.

1. Loss History and Claims Discipline

Loss history is the single largest rating factor you influence. Frequency matters as much as severity: three small claims often price worse than one large one, because frequency suggests a management problem rather than an event.

With deductibles where they now sit, many small losses are below the retention anyway. Establish a threshold under which you handle the loss rather than notifying it, take the decision deliberately, and document it. This is a conversation to have with the owner and broker rather than a policy to adopt unilaterally.

2. Documented Preventive Maintenance

Underwriters respond to evidence, not assurance. Roof age and condition, electrical panel type and updates, plumbing and supply-line replacement programmes, water-detection devices, sprinkler and alarm testing records: these are all rating inputs, and the operator who can produce dated records gets credit that the operator who says "we keep on top of it" does not.

This is the clearest case where a maintenance system pays for itself outside maintenance. Our guide to maintenance as a competitive advantage covers how to capture that data in a usable form.

3. An Accurate Schedule of Values

Underinsurance and overinsurance are both expensive. Values that have not been revisited since before construction-cost inflation may leave the property unable to rebuild after a total loss, and may trigger a coinsurance penalty on a partial one. Values inflated by an outdated blanket uplift mean paying premium on money you will never claim.

Reviewing the schedule of values annually is dull work that almost nobody does, and it moves the number in both directions.

4. Vendor Risk Transfer

Every loss caused by a contractor that ends up on your owner's policy is a loss that raises your renewal. Making sure vendors carry appropriate coverage, and that your owner entities are properly named as additional insured by endorsement rather than merely listed as certificate holders, keeps those losses where they belong.

5. The Renewal Submission Itself

Start ninety days out, not thirty. Produce a submission that includes updated values, loss runs, a maintenance and capital improvement summary, and answers to the questions underwriters always ask before they ask them.

Brokers will tell you, if asked directly, that the quality of the submission affects the quotes they can obtain. Most management companies treat the submission as paperwork due at the last minute. It is the one document in the process that you fully control.

The Response That Backfires

The tempting move when a premium quote lands is to cut coverage until the number fits the budget. Raise the deductible, drop a sub-limit, accept a wider exclusion, and the line item behaves.

This is sometimes the right decision, made explicitly, with the owner understanding the risk they are now carrying. More often it is a budgeting decision made under time pressure that nobody documents, and the person who discovers what was given up is the claims handler two years later.

If coverage is being reduced, the owner should approve it in writing, with the specific exposure named. Not because of liability, though that matters, but because an owner who agreed to carry a risk responds very differently to a loss than one who did not know they were carrying it.

Budgeting for Volatility

Budgeting insurance by adding a percentage to last year has failed for four consecutive years. The alternative is not a better single number, it is a range.

Build the budget with the broker's indication rather than a formula, and where the market is unsettled, model a base case and an adverse case rather than a point estimate. Flag the exposure to owners during budget season instead of at renewal, because an owner who has seen the possibility of a large increase in October reacts very differently to it in February. Our operating cost benchmarks cover where insurance now sits relative to other cost lines.

Note that this article is general background rather than insurance advice. Coverage, requirements, and regulation vary by jurisdiction, and specific decisions belong with your broker and counsel.

Where the Technology Comes In

Almost everything an underwriter rewards is a documentation problem. Loss runs, maintenance records, capital improvement history, values, and vendor compliance status all exist somewhere in most operations. The difficulty is that they exist in different places, so assembling a credible submission becomes a project rather than an export.

That is the problem RIOO is built for, and the split is worth being precise about:

• Maintenance, inspections, capital works, facility management, and vendor records run inside RIOO as a purpose-built property management layer, so the evidence of how a building is maintained accumulates as work is done rather than being reconstructed at renewal.

• Finance, multi-entity accounting, budgeting, and reporting are handled by the NetSuite core RIOO is built on, which is where that depth is native.

• Both draw on one record, so insurance cost by property, loss experience, and maintenance history can be read together rather than assembled from three systems.

The practical effect is that a renewal submission becomes something you produce rather than something you survive. RIOO runs more than 180,000 units under management across residential and commercial portfolios on that architecture.

Where to Start

Pull the last three renewals for one property and chart the premium, the deductible, and any changes to sub-limits or exclusions. Most operators have never looked at those three together, and the picture is usually more revealing than the premium alone.

Then ask your broker one question: what would improve this risk in an underwriter's eyes. The answer is usually specific, usually operational, and usually something a management company can actually deliver.

Book a RIOO Demo

RIOO keeps maintenance history, capital works, vendor records, and property financials on one system, so the evidence underwriters want is already assembled. Book a demo and see how it works across your portfolio.

Frequently Asked Questions

1. Why have multifamily property insurance premiums risen so sharply?
Several pressures arrived together: catastrophe losses and climate exposure, higher construction and repair costs raising the value of what is being insured, tightening reinsurance markets, and carriers withdrawing from high-risk states. Federal Reserve data shows insurance rising from under 2 percent of multifamily revenue in 2000 to nearly 5 percent by 2024, with most of that shift concentrated in recent years. A Minneapolis Fed survey of owners found average premium increases of 14 percent, 22 percent, and 45 percent across three consecutive years to 2024.

2. Can a property manager influence insurance costs?
Yes, more than most assume. Managers do not set market pricing, but they control the inputs underwriters price: loss frequency and claims history, documented preventive maintenance and loss-control measures, accuracy of the schedule of values, vendor risk transfer, and the completeness of the renewal submission. Underwriters price uncertainty, so a well-evidenced submission generally prices better than a vague one on the same building.

3. How should property insurance be budgeted now?
Adding a fixed percentage to last year has been unreliable for several years running. Use the broker's renewal indication rather than a formula, and in unsettled markets model a base case and an adverse case rather than a single number. Raise the possibility of a large increase with owners during budget season rather than at renewal, since the conversation is far easier before the number arrives.

4. What happens when insurance deductibles increase?
A higher deductible moves a whole category of loss from the insurer to the owner, which changes the economics of preventive maintenance. Work that looked marginal when the insurer absorbed water damage becomes clearly worthwhile when the first substantial layer of loss is self-funded. Owners are also increasingly avoiding filing claims to protect loss history, which makes the effective self-insured layer larger than the deductible alone suggests.

5. Should coverage be reduced to control premium costs?
Sometimes, but only as an explicit decision the owner has approved in writing with the specific exposure named. Reducing coverage to make a budget line fit, without documenting what was given up, transfers risk quietly and the consequence surfaces at a claim rather than at renewal. An owner who knowingly accepted a retained exposure responds very differently from one who did not know it had changed.