Insuring Multifamily Apartment Buildings - How Can You Reduce Your Premiums?

March 13, 2023

If you’ve been an owner or developer of multifamily real estate (ie. apartment buildings) you’ve had some serious frustrations over your rising premiums the last number of years. If they are older than 40 years - and I don’t need to tell you - unfortunately you've been hit the hardest. Insurance capacity has evaporated over the last decade for apartment buildings, causing a rapid ascent in premiums and reductions in coverage. 

Now that I’ve told you what you already know .. let’s explain how you can fix it. While there are some factors that are outside of your control, there are plenty of actions you can take to solve these issues. Here are 4 tips on how you can reduce your multifamily apartments insurance premiums without sacrificing on coverage: 

Find a GREAT insurance broker who understands your market

I’ve listed it #1 because well .. the most important “asset” you can have to lower your premiums as an owner, developer or asset manager is a great insurance broker. A strong broker will be able to collect all the necessary information (good, bad, ugly) on your portfolio and present a powerful and compelling submission to specialized insurance markets.

NO, not all insurance companies will quote the same premium/coverage to every broker, because not every broker is positioning the risk in the same way. If the underwriter feels the insurance broker has experience in this segment, and is implementing a calculated risk management strategy they will give preferential treatment because this reduces their exposure. You need to realize the insurance broker is acting on your behalf to the insurance companies, and the insurers are underwriting them and their experience as much as they are your business and your experience in the space. 

Retrofit your building with upgrades

If your buildings are on the older side, you NEED to consistently upgrade your buildings and make sure you clearly outline this to your broker. When companies acquire older buildings, they often don’t know when the previous owner updated it, for example the wiring, roofing or plumbing - and this can have a detrimental effect on pricing. Providing records of renovations or services to the building's infrastructure can help get underwriters more favorable to the risk.

Additionally, there are new technology solutions that can not only reduce the premiums of your buildings but create true value-adds for the residents. For example, Eddy Solutions protects against water damage with intelligent technology and real-time data. Water damage is one of the most common claims for any apartment building owner, and is often the reason insurers are increasing deductibles dramatically in 2022. By implementing a solution like Eddy, not only will you reduce the frequency of claims but you are likely to get a preferred deductible from your insurance company

Another solution is a company called 1Valet, which is a smart building operating system that combines hardware, software, and services to make residential buildings better places to live and work. Not only will this make the lives of your residents more pleasant, but additional layers of security reduce the frequency of break-ins and vandalism which are big drivers of claims. Similar to Eddy Solutions, retrofitting your building into a “smart building” can give you preferential rating and pricing from insurance companies. Remember, all of this doesn’t matter if you don’t have a GREAT insurance broker who can market these solutions to the insurers on your behalf.

Don’t just read, ACT on insurance company recommendations

Having a loss control consultant visit your properties to conduct an inspection does not mean you are in trouble, they are there to help. This is a value-added service offered by some insurance companies who take a loss-prevention approach to underwriting. The premise is that they identify exposures and provide recommendations on how you can mitigate the chances of loss. The benefit to the insurer is they invest capital into engineering and loss prevention so they have less claims, and can be more competitive on pricing. The benefit to the property owner is that they get value-added engineering services in the form of recommendations, and reduced premiums.

If you receive recommendations, and do not act on them, an insurance company is not going to surcharge you. Conversely, if you receive recommendations and act on them, the underwriter will review this on renewal and see that you have acted on at least some of their recommendations and improved the risk in their eyes, likely giving you preferred premiums and coverages.

Have a risk management and loss prevention strategy

Do you have a risk manager? If you own several multifamily apartment buildings you should. The expense of having a full-time advisor who is mitigating your risks is a fraction of what preventing one claim could be, or depending on how large your portfolio is and what your annual insurance premiums are.

Usually a risk manager is someone who has previously acted as an underwriter or insurance broker, and acts as an in-house advisor to the firm’s executives. They deal with much more than just insurance (as reflected in their title) but will usually be the ones choosing which broker you should work with, reviewing insurance company recommendations, and recommending loss prevention techniques of their own. For example making sure every resident in the building has a minimum limit of liability insurance (ie. renters insurance), and shows proof of their insurance annually would likely be a program the risk manager recommends and monitors. Not all multifamily apartment owners, developers and asset managers have renters insurance programs and this is a unique strategy to mitigate risk and get preferential rating from the insurance company.


So where should you get started? Well let’s be clear - NONE of these will impact your insurance premiums or coverages if you do not have a broker who is experienced in placing multi-family apartments, and marketing these efforts to the insurers every year.

If you already have a great broker, retrofitting your buildings, acting on recommendations and deploying a targeted risk management strategy are all great ways to get premium reductions without sacrificing on coverage. At the end of the day, insurance companies have the authority to give preferred pricing if they feel you are making efforts to reduce risk, so make sure you’re giving them a reason to.

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