Soaring Insurance Premiums: Who Pays the Price?

In recent years, insurance costs for apartment owners have soared, increasing at unprecedented rates. While inflation has begun to cool, it surged dramatically in 2021 and 2022, adding another layer of financial strain on property owners.

The National Apartment Association (NAA) reports that approximately 27 cents of every rent dollar goes toward operating expenses, including insurance. With property insurance rates rising for 25 consecutive quarters, the financial burden on apartment communities continues to grow. This includes not just standard property and casualty insurance but also coverage for affordable rental housing communities, which have been hit especially hard.

Recognizing the severity of the issue, a large Housing Affordability Coalition, including NAA, sent a letter in June 2024 urging the Administration, Congress, and federal policymakers to address the root causes of skyrocketing insurance premiums. According to the letter, affordable rental housing communities have faced annual premium increases ranging from 30% to 100% over the past three years—a staggering and unsustainable trend.

Why Does This Matter?

Because rising insurance costs don’t exist in a vacuum. Just like in any other industry, when the cost of doing business increases, those expenses are ultimately passed down to consumers. In this case, that means higher rents for residents—making housing affordability an even bigger challenge.

The rental housing industry remains deeply concerned about this growing financial pressure. Moving forward, we must work hand in hand with elected officials, industry partners, and policymakers to explore meaningful solutions that help curb rising insurance costs and protect housing affordability.