Across the U.S. economy, inflation during the past few years has forced a repricing of goods, labor and risk. While much of the early focus centered on consumer prices and interest rates, there is another cost category resetting across the real estate industry: insurance costs. Insurance is quickly becoming one of the most volatile line items in multifamily housing operating expenses. Volatility in premiums is forcing owners to rethink underwriting, budgeting and risk management strategies, with smaller operators potentially facing the greatest exposure. Rising construction costs, climate-related risk exposure and tightening reinsurance markets have pushed insurers to reassess pricing across property portfolios nationwide.
National apartment data from both expense benchmarking and macroeconomic sources show a clear material upward trend in the past five years; national average insurance costs have risen sharply and substantially across the multifamily industry in the past five years, reinforcing that insurance is emerging as one of the fastest-growing operating expenses for apartment properties. Meanwhile, metro-level analysis indicates that certain markets are experiencing significantly higher cost pressures, while others are not. Metro-level data reveal widening divergence across markets as insurers price risk differently depending on geographic and weather exposure, claims history and local economic conditions.
National Multifamily Housing Insurance Premium Trends
At a national level, same-store benchmarking data show annual multifamily housing property insurance costs per unit increased from $502 in 2021 to $777 in 2024, representing a 55% rise during that time. The escalation was not linear: 2022 saw an 11% increase, followed by a significant inflection point in 2023 with a 25% surge, and a further 12% increase in 2024 followed. Even though 2024 growth slowed relative to 2023, the higher baseline from 2023 remains, meaning operators are now budgeting at a materially different level than they were seven years ago. Insurance is no longer a background expense. At nearly $800 per unit nationally, it has become a meaningful pressure point in NOI calculations.
This analysis is corroborated with time-series multifamily insurance trends tracked by the Federal Reserve, which show a similar acceleration. Real annualized multifamily property insurance costs per unit increased from about $465 in 2019 to about $821 in 2024, representing around a 77% increase over five years.
For nearly two decades prior, insurance costs remained largely stable, generally fluctuating between roughly $390 and $430 per unit between 2010 and 2018. The sharp increase observed in recent years suggests that insurance is transitioning from a stable expense category to one experiencing meaningful structural volatility.
Factors Driving Rising Insurance Costs
To understand why insurance premiums have risen so dramatically, it is essential to examine the global reinsurance industry. Reinsurance enables insurance companies to manage large property portfolios by transferring portions of their risk. In recent years, reinsurers have encountered significant challenges, including increased losses from severe weather events, revised climate models forecasting elevated risks in previously moderate regions, and reduced investment in high-risk categories. Consequently, reinsurance has become both more costly and harder to obtain, thereby increasing expenses for insurance companies, which are subsequently passed on to policyholders.
For rental housing providers, escalating premiums in certain markets are largely attributable to global financial and risk dynamics, rather than local claims or operational decisions. Thus, insurance costs are expected to remain volatile, even during periods without major local disasters.
The increase in insurance premiums represents only one aspect of the difficulties faced by rental housing providers within the current insurance market. In high-risk regions, property owners are not merely contending with higher costs but also receiving diminished coverage in return. Policies now frequently entail elevated wind and hail deductibles in Texas, exclude flood protection unless supplemental National Flood Insurance Program (NFIP) or private flood policies are purchased, and occasionally eliminate loss-of-rents provisions. Hence, while expenditures rise, the extent of financial protection provided by these policies has become increasingly constrained.
Compounding this issue is the continued withdrawal of leading insurance companies from high-risk states. In California, several major insurers have ceased issuing new property policies due to wildfire losses and regulatory constraints on rate increases. In Florida, recurrent hurricane damages and surging litigation-related claims have prompted many insurers to cancel existing policies or exit the market altogether. As a result, rental housing providers in these states are relying more heavily on state-operated insurance programs, which typically offer limited coverage and impose higher fees, further exacerbating financial unpredictability.
The contraction of the private insurance sector in these states presents a longstanding challenge that impacts property underwriting, investment capacity in the housing sector, and, ultimately, housing affordability.
What Higher Insurance Premiums Mean for Multifamily Operators Going Forward
Insurance costs have experienced substantial growth over the past 25 years. Multifamily housing providers have felt this impact acutely. According to the Federal Reserve report, the pass-through insurance cost for each unit in a multifamily property in 2024 was approximately $68 per unit, representing a 55% increase since 2020 and an overall rise of 228% since 2000. In addition to absolute values, the Federal Reserve indicates that insurance expenses have increased as a percentage of revenue: in 2000, insurance accounted for 1.95% of multifamily revenue, rising to 4.78% by 2024.
Insurance, specifically property, hazard and liability has evolved from a relatively predictable operating expense into a strategic risk variable. Nationally, operators are budgeting roughly $275–$356 more per unit compared to previous years. It is important to consider market-specific factors: For instance, a 50% increase in a market with an average price of $400 has different implications than the same percentage increase in a market priced at $800. In certain markets, such as Houston, rates now surpass $1,200 per unit, which has a significant impact on underwriting models. Hence, insurance is no longer a marginal line item; it is a defining component of operating strategy in 2026.
View more information on metro insurance trends.
Erioreoluwa "Eri" Bajomo is NAA Manager, Industry Research.
Data Sources & Methodology
This analysis is primarily based on two sources. Multifamily housing benchmarking data for apartment properties reporting financial data, examining national and metro-level trends in property, hazard and liability insurance. The multifamily benchmarking data used in this article references the National Summary Income/Expense IQ 2024 and specifically analyzes same-store insurance data of 22 metropolitan markets from 2021–2024, highlighting where premiums are spiking and what owners and managers should watch in 2026.
Additional context incorporates multifamily national and metropolitan property insurance data tracked by the Federal Reserve System and other industry sources.