Don’t Find Yourself Out On The Street, Without Insurance

Owners of multifamily housing are seeing an upheaval in their renewals this year if they are even being offered one!

The multifamily and rental property industry has been facing a challenging market place for several years but this past year and the next 24 months may put many landlords out on the street without coverage. Carriers have stopped offering Actual Cash Value as an option for valuation, thus forcing landlords to insure their properties at Replacement Cost and increasing the values that the buildings are being insured for to comply with policy provisions, thus drastically increasing premiums. Other carriers have tightened up their underwriting in various ways. Examples include reducing the maximum age of buildings from 35 years old to 10 regardless of updates. Cancelling clients after a single loss. Increasing minimum deductibles to $10,000.00 per claim and even in non-wind prone areas adding a percentage deductible for wind/hail losses. If your policy is valued at replacement cost an ACV endorsement for roof losses may be added, if the roof is older.

What is the cause for these drastic actions and large premium increases? The largest factor has been the increase in frequency and severity of natural disasters, (CAT claims) that has led insurance companies to payout record amounts for claims. Examples in Northeast Ohio include this year’s March 20^th wind event, July 20^th hail storm and the August 25^th Urban Tornado that ripped through Cleveland.

Urban tornadoes in my opinion are an example of a peril that actuarial data did not contemplate and must now be considered in providing data to rate makers at insurance companies across the United States.

As a landlord or property manager what should you do to prepare for your next renewal cycle? Review your loss history to ensure it is accurate, advise your agent of any improvements you have made to your property to ensure they can obtain the best terms at renewal. In the current market conditions, your agent should be in-contact with you to create a game plan and assist you in navigating these difficult times in the multifamily/habitational insurance market.