New Survey Sees Increased Insurance Costs for Affordable Providers
Deductibles are rising, and restrictions or changes in policies are becoming more common.
A new survey focusing on affordable housing providers and insurance costs and availability has found that rental businesses are facing much higher premiums—nearly one in every three policies had rate increases of 25% or more. The survey, conducted by ndp analytics and commissioned by the National Leased Housing Association (NLHA), aligns with other recent research released earlier this year by the National Multifamily Housing Council, which found that 26% of property insurance costs have increased over the past year.
Housing Providers Take Action
Nearly all housing providers are taking actions such as increasing insurance deductibles, cutting expenses, or being forced to raise rents (when possible) to manage higher operating costs due to higher insurance premiums driven by limited markets, claims history and renter populations.
Other Key Findings:
Key findings of the survey note that for 2022-23 renewals, 29% of housing providers experienced premium increases of 25% or more, compared to 17% the previous year; limited markets and capacity are responsible for most premium increases, followed by claims history/loss and renter population; and 67% of respondents reported increasing insurance deductibles to manage the increases followed by decreasing operating expenses and increasing rent.
“The impact of rising insurance premiums coupled with the ability to obtain necessary coverage has already begun to impact affordable housing development and preservation efforts,” notes Denise B. Muha, NLHA Executive Director, in a prepared statement. “Further, existing property owners are faced with difficult choices as they struggle with operating deficits related to mounting insurance costs. These cost increases are not sustainable.”
According to NMHC president Sharon Wilson Géno, “This is further evidence of what the overwhelming majority of rental housing providers already understand—insurance costs are drastically rising across the board. This report demonstrates that while insurance costs and availability are negatively impacting all housing providers, the problem is especially acute for affordable housing providers in particular. Many affordable firms are limited in the cost mitigation steps they can take and already face smaller operating margins—creating even deeper affordability challenges.”
Check out other related stories on the subject below that you might have missed.
Insurance Looms Large for Multifamily Owners
Crushing Property Insurance is Hurting Apartment Deals