Managing Property Insurance Costs in Multifamily Affordable Housing Organizations

High development and operating costs already threaten the availability and production of multifamily affordable housing in the US. Soaring insurance costs paired with frequent destructive climate events further compound this problem. In an already-strained market, inflation, reinsurance markets, and weak regulatory oversight contribute to rising and volatile property insurance costs and availability. 

In my new paper, written as part of my Gramlich Fellowship in Community and Economic Development, I explore several strategies multifamily affordable housing organizations can employ to manage high property insurance costs in the short term. 

Between 2019 and 2024, multifamily buildings in the US experienced significant increases in property insurance costs. While the property insurance market has softened in recent years, many multifamily affordable housing organizations still struggle with maintaining existing properties due to high operating costs. This presents a threat to the existing affordable housing stock. Moreover, increased insurance rates and decreased availability of insurance create additional barriers to the development of affordable properties. Given that property insurance markets have historically been cyclical, and we are likely to experience a hardening market in the coming years, affordable housing maintenance and development is likely to become even more challenging in the near future. 

Many regions are far from meeting their housing affordability goals, making it increasingly urgent to lower the cost barrier posed by insurance to the development and maintenance of affordable properties. In the existing literature on this topic, the difficulty of meeting insurance costs is primarily discussed within the context of single-family homes. However, it is equally necessary to address insurance cost volatility for multifamily and affordable properties.

This paper compiles the knowledge I gained from 20 interviews with insurance professionals, policy experts, and affordable housing developers and operators that took place between June and September 2025. It focuses on strategies that affordable housing operators and developers can implement in the short term to manage costs. These strategies include the following:

• Design and develop to limit risk. Modifications at the site plan level, such as designing for increased space between buildings and including firewalls, can impact insurers’ assessment of risk. Property owners might also consider fire-resistant building materials and separate storage spaces for electric bikes and other lithium-ion devices. Interviewees recommend utilizing catastrophe modeling and diversifying portfolios geographically to limit coastal exposure. Roof fortification is also recommended in some areas, as is building property well above the Baseline Flood Elevation in areas prone to flooding.
• Implement safety improvements or retrofits. Multifamily affordable housing organizations should consider adding stovetop fire stops, water overflow sensors, and other safety improvements. Interviewees recommend carefully documenting all maintenance and improvements made, as these will factor positively into an overall application for insurance. Additionally, residents can be taught safety practices, and property managers should engage in regular maintenance of units. 
• Craft an effective annual insurance application. Interviewees recommend limiting the amount and duration of claims. Dealing with smaller issues internally rather than filing a claim can help an application and prevent larger premium increases in the long term. A thorough statement of values and cover letter should be included with the application. Maintaining a strong relationship with an insurance broker is important, as is telling a compelling story of why a particular property is safer than others in the same peer group.
• Consider self-insurance. Larger organizations should consider alternatives to traditional insurance coverage such as captives, deductible reimbursement policies, and electing to have a higher deductible.
• Advocate for insurance industry regulatory changes. Consider forming statewide or regional coalitions to advocate for state-backed reinsurance or state-run policies that help fund risk mitigation and safety improvements. 

Although design strategies, carefully crafted insurance applications, and thorough statements of value may be beneficial tools for some organizations, an exclusionary model of insurance will often leave others behind to bear debilitatingly high premiums and deductibles. For-profit insurance companies and competitive insurance markets will insure the organizations that submit the most compelling applications. 

The implications for affordable housing organizations are bleak: either outperform peer organizations or be left with little choice in insurance procurement. Many strategies to acquire more manageable insurance rates require significant up-front capital and resources, a condition that places a range of organizations at risk. As climate disasters become more frequent in larger geographic areas of the country and further exacerbate rising and volatile property insurance rates, many advocates are pushing for more comprehensive policy reform. 

While the strategies above can help in the short term, long-term strategies, including advocating for increased regulation or reform of the insurance industry, will ultimately be required to address high costs in the property insurance market that threaten the development and operation of affordable housing.