In the multifamily sector is not news that the cost of insurance is rising. “Last year, pricing increased by 20% to 40% instead of the typical 10% to 15% increase we would typically see,” Jeremy Burr the vice president of sales at Insurance Office of America says.

There are a lot of factors influencing this increase in the prices, the first one is the natural disasters because these events are happening even more often than before causing more and more damage in the recent years. These have caused significant losses for insurers.
“Insurers generally have lost money in six of the last 10 years, in part due to climate change, social inflation, unprecedented large jury awards, and inadequate pricing,” says Stephen Gaitley, senior vice president and real estate practice leader for Woodruff-Sawyer.
The second factor in this topic is inflation because of the rising costs of building materials, such as lumber, steel, fuel, and other supplies. Supply chain pressures and bottlenecks continue to drive up inflation costs. What we’re seeing is the added challenge of not knowing when materials will turn up at the site.

Al lof these costs ultimately get pushed onto the insurance company in the case of a claim, so as claim payments increase, the insurance companies need to increase rates commensurately. Most substantial increases will be felt by those builders with large fleets, high commercial umbrella limits, wind-prone geographies, and those with unfavorable claim history.

Here we help you how to minimize costs

First of all, the best way to reduce risk is to maintain properties the best you can as the property owner, for example, keeping the fire hazards, taking care of the damages rain can make, and other simple steps this will make insurance companies note that the property is well-maintained and might lower premiums because of it.

The best strategy for suppressing increases is to take ownership of your risk management plan, if you make a priority on safety, loss control, and claims management can organically reduce the frequency of damage, making it more attractive to insurance companies.
Improving tenant safety and security is another way to mitigate these rising costs this could mean installing security cameras or if you own an old building that doesn’t have fire sprinklers, adding those sprinklers can drastically reduce premiums. It might be an additional cost on the building initially, but it could ultimately mean paying less for insurance.