8 Ways to Lower Your Apartment Building Insurance Costs
Reduce your premiums by taking these four steps with your multifamily property and another four you can take when you set up your policy.
- Proactive Property Management Methods
- 1. Implement Risk Management Controls
- 2. Green and Sustainable Initiatives
- 3. Tenant Screening and Education
- 4. Collaborate With Local Authorities and Community Organizations
- Insurance Policy Management Strategies
- 1. Shop Around
- 2. Bundle Policies
- 3. Review Policies Annually
- 4. Raise Deductibles
- Get Financing
The cost of insuring multifamily properties has skyrocketed, thanks to a mix of inflation, soaring property values, and environmental and weather-related insurance losses.
Find out eight ways — four involving your property’s operations, the other involving how you manage your policy itself — to keep your insurance premiums under control, resulting in a healthier bottom line for your apartment complex.
Note: These eight ways are only good if you've found a great insurance company to work with for your multifamily insurance policy. If your premiums have gone up significantly (and whose haven't, lately?), be sure to contact Janover Insurance Group to get a free, no-obligation quote.
Proactive Property Management Methods
First things first, there are some key steps you should be taking at your property that can reduce your insurance premiums, all while boosting your renter experience.
1. Implement Risk Management Controls
Regular maintenance is essential to keep a property in good condition and minimize potential hazards.
For example, a property manager might already schedule annual inspections to ensure that the roof, plumbing, and electrical systems are functioning correctly. However, investing in more frequent inspections — or smart technology to identify issues before or as they appear — can play a major role in reducing the likelihood of water damage or fires.
Installing security systems such as surveillance cameras and access control systems can deter criminal activity and protect both tenants and property. Fire alarms and sprinkler systems should be installed and maintained to quickly detect and suppress fires, potentially saving lives and reducing property damage. These risk management measures can lead to fewer insurance claims, resulting in lower insurance premiums.
That’s not all, though. While most risk management controls are about preventing issues, understanding why claims occur and implementing measures to prevent the same problem from happening again is a good way to alleviate worries over your building’s risk profile.
2. Green and Sustainable Initiatives
Eco-friendly and energy-efficient improvements not only benefit the environment but can also translate into insurance savings. Some insurance providers offer discounts for properties with green certifications like LEED or Energy Star, recognizing their reduced environmental impact and increased resilience to certain risks, such as weather-related damage.
But of course, there’s even more upside to be found in reduced expenses in other areas. For instance, a multifamily property could install solar panels to generate clean energy, reducing dependence on the electrical grid and lowering utility expenses. Green roofs can help manage stormwater runoff, insulate the building, and mitigate the urban heat island effect.
3. Tenant Screening and Education
A comprehensive tenant screening process can help identify responsible renters who are less likely to cause property damage or engage in risky behavior. For example, a property manager could require credit checks, reference calls to previous landlords, and background checks to ensure that prospective tenants have a history of timely rent payments and respectful behavior.
Once tenants move in, providing educational materials or workshops on fire safety, emergency preparedness, and general property maintenance can help prevent accidents and property damage. For instance, a property manager might distribute information on how to properly use and maintain appliances or what steps to take if a water leak is discovered.
While this may not always directly translate into lower insurance premiums, it can play a significant role preventing incidents that would require you to file property claims — and that would help your premiums stabilize.
4. Collaborate With Local Authorities and Community Organizations
By establishing partnerships with local authorities and community organizations, a property manager can contribute to a safer living environment and potentially lower insurance costs.
For example, collaborating with the local police department on a neighborhood watch program can help reduce crime rates in the area and create a sense of community among tenants. Hosting safety seminars with the local fire department can raise awareness about fire prevention and ensure that tenants are prepared in case of an emergency. Participating in community cleanup events or supporting local initiatives can further demonstrate a commitment to safety and well-being, which may be favorably viewed by insurance carriers and lead to lower premiums.
Insurance Policy Management Strategies
Beyond how you run your property, it’s also critically important how you set up your insurance policy. Grabbing a standard policy off the shelf isn’t only unwise, it’s also expensive.
1. Shop Around
Just like shopping around for a loan, obtaining quotes from multiple insurance providers is essential to finding the most competitive rates and coverage options.
For example, a multifamily property owner might compare quotes from three to five different carriers, taking into account not only the cost but also the extent of coverage and customer service quality. To streamline this process, property owners can work with an independent insurance agent or broker, who has access to a wide range of carriers and can provide expert advice on choosing the best policy for their specific needs.
Note that while there are many platforms that offer quotes from various insurers, they don’t generally offer instant comparisons and will typically be handled in a similar fashion as working directly with an insurance broker.
2. Bundle Policies
Combining multiple insurance policies with one carrier can often result in discounts, as insurers appreciate the additional business and may reward customer loyalty.
For instance, a multifamily property owner might bundle their property insurance with liability and commercial auto insurance for maintenance vehicles, resulting in a lower overall premium. It is important to compare the bundled premium with the cost of purchasing the policies separately to ensure that bundling provides the best value.
3. Review Policies Annually
Regularly reviewing and updating insurance policies ensures that they accurately reflect the property's value and risk profile. For instance, a property owner might have recently completed renovations that increase the property's value, necessitating an adjustment to the policy coverage.
Similarly, improvements in the property's risk profile, such as installing a new security system or completing a green certification, could qualify for premium discounts. By conducting an annual policy review, property owners can identify opportunities to reduce premiums, negotiate better terms with insurance providers, and ensure that their coverage remains adequate to protect their investment.
And all of that aside, reviewing your policies annually gives you an opportunity to again shop around with insurers. The best deal for your apartment building last year may not be the best deal this year, after all.
4. Raise Deductibles
Just like with health insurance, a higher deductible can mean lower premiums. Basically, that shifts more financial responsibility for claims to the apartment building owner. This is an easy way to lower your monthly premiums, but be careful: If you have a claim, you may need to keep extra cash reserves to cover your losses.
To that end, before raising your deductible, don't forget to carefully examine your ability to cover deductible if (or when) you need to file a claim. As a property owner, you should also maintain an emergency fund to cover unexpected expenses, including the deductible, without straining their finances.