Insurance is one of the most overlooked line items when underwriting a multifamily deal — until a renewal comes in far higher than expected. Before you bind a new policy or shop a replacement, make sure you and your broker have covered these questions.
- What factors affect your policy costs, such as age and location?
- Does having a pool increase your rate significantly?
- How old can the roof be before a provider will refuse to cover it?
- How important is it for tenants to carry renters insurance, and does requiring it lower your rate?
- What additional structures need to be insured, such as carports and storage buildings?
- How do Fannie Mae and Freddie Mac minimum coverage requirements differ from non-agency loans?
- What does Ordinance and Law coverage actually cover?
- Do you need business income, or replacement, insurance?
- Is it standard to expect a new policy to run about 10% higher than what the previous owner paid?
A good insurance broker who specializes in multifamily can walk through each of these with you, and the answers can meaningfully affect your underwriting.
