Habitational Risk: Underwriting Trends Multifamily Owners Should Watch

Owners of apartment communities have spent several years watching their insurance renewals change character. Premium increases are only part of the story. Deductibles have risen, sublimits have appeared for perils that were once covered in full, carriers have asked pointed questions about building systems, and in some cases markets that previously wrote the class have pulled back. For an owner or asset manager, the practical result is that insurance has become a more active part of managing the property, not a line item settled at renewal.

Understanding why carriers behave this way, and what they are looking for, is the starting point for presenting an account well. This post outlines the underwriting themes that have shaped habitational insurance in recent years. Market conditions change, so owners should confirm how these themes apply to their own properties and current renewals.

What Habitational Risk Includes

Habitational risk generally refers to properties where people live: apartment communities, condominiums, senior and student housing, and similar residential properties held for rent or occupied by owners through an association. These properties share features that make them distinctive for underwriters. They are occupied around the clock by many people who do not own the building, they contain extensive plumbing, electrical, and cooking systems, and they generate frequent small claims alongside occasional severe ones.

Theme One: Water Damage Dominates the Loss Picture

Water is the most persistent source of losses in multifamily properties. Pipes burst or leak, appliances fail, water heaters rupture, roofs and windows admit rain, and a problem in one unit travels through walls and ceilings to others. Because units are interconnected, a single event can damage many apartments, displace residents, and generate substantial claims.

Carriers have responded with higher water damage deductibles, sublimits on certain water losses, and closer questions about plumbing materials and maintenance. Owners should expect to be asked about the age and type of plumbing, whether leak detection or automatic shutoff devices are in place, how quickly leaks are addressed, and how units are inspected between tenants.

Theme Two: Building Age and Building Systems

Underwriters pay close attention to the age and condition of major systems. Roofs, plumbing, electrical panels and wiring, and heating and cooling equipment all influence the likelihood and severity of loss. Carriers commonly want to know when each was last replaced or updated, and some apply restrictions or pricing adjustments to buildings with older systems.

Roof coverage is a frequent area of change. Some policies now settle roof claims on an actual cash value basis rather than replacement cost, which reduces recovery for older roofs. Owners with aging roofs should understand how their policy would respond to a loss and whether a capital plan for replacement would improve their position.

Theme Three: Fire Risk

Fire remains the source of the most severe property losses in habitational buildings. Common causes include cooking, smoking, electrical failures, and heating equipment. More recently, carriers have also focused on fires related to lithium-ion batteries in e-bikes, scooters, and other devices charged inside units.

Construction type matters, as does the presence of sprinkler systems, working smoke detection, and the distance to fire protection. Properties under renovation or construction can be especially exposed. Underwriters may ask about fire safety programs, resident policies on cooking and charging devices, and inspection practices.

Theme Four: Weather and Catastrophe

Wind, hail, severe convective storms, hurricanes, flooding, and wildfire have all contributed to carriers tightening terms in affected regions. Many policies now carry percentage-based deductibles for wind and hail or named storm events, which can produce retained losses far larger than a flat deductible would. The mechanics are explained in our discussion of named storm deductibles and coverage gaps, and they apply directly to multifamily portfolios in exposed areas. Flood is generally excluded from property policies and requires separate coverage.

For owners with properties across multiple regions, deductible structures and catastrophe exposure may differ by location, and a portfolio review is more informative than evaluating each property in isolation.

Theme Five: Valuation and Insurance to Value

Construction and replacement costs have risen, and values set several years ago may no longer reflect what it would cost to rebuild. Carriers have become more attentive to insurance to value, and many policies include coinsurance provisions that penalize an owner who insures a building for less than the required percentage of its value. If a building is insured at half of the value the policy requires, a partial loss may be reduced proportionally, leaving the owner to absorb the difference.

Rental income coverage deserves similar attention. When a building is damaged, residents may need to be relocated and rents lost for months. Owners should confirm that coverage for loss of rents is sized to realistic repair and re-leasing timelines. The risks of leaving a building unoccupied are also covered in our post on vacant property coverage, which is relevant to units or buildings held vacant during renovation or turnover.

Theme Six: Liability Pressure

Habitational liability has attracted heightened scrutiny. Premises liability claims arise from slips and falls, inadequate lighting or security, pools, and unsafe conditions. Claims involving assaults on residents or guests can allege inadequate security or negligent screening and management. Carriers have responded in some cases by applying sublimits or exclusions for assault and battery, and by asking more detailed questions about security measures, lighting, access control, and incident response.

Other liability issues include habitability claims, mold allegations, dog bites, and claims related to fair housing and management practices. Rising jury awards, often referred to as social inflation, have made carriers more cautious about excess and umbrella capacity, and limits that were once straightforward to obtain can be harder to place or more expensive.

Contracts matter here as well. Management agreements, vendor contracts, and leases all contain indemnification and insurance requirements that need to align with the owner's coverage, a principle explored in our discussion of contractual liability.

Theme Seven: Capacity, Pricing, and Market Selectivity

As losses accumulated, some carriers reduced their appetite for habitational business, and others became selective about building age, location, and operating practices. Programs that once offered broad coverage at stable prices have been reshaped. Owners may find that coverage structures, carriers, and terms shift from year to year, and that the best outcomes go to accounts that can demonstrate strong operations.

How Owners Can Present a Stronger Account

Owners cannot control the market, but they can influence how their properties are perceived.

Plan capital improvements around insurability. Replacing aging roofs, plumbing, and electrical components can reduce both risk and underwriting friction. A documented plan, even where work is phased, helps.

Invest in water mitigation. Leak detection, automatic shutoff valves, regular inspections, and prompt response to water issues directly address the most frequent source of loss.

Strengthen fire prevention. Working detection and sprinkler systems, resident education on cooking safety, and clear policies on charging lithium-ion devices reduce exposure.

Improve security and screening. Lighting, access control, incident response procedures, and consistent tenant screening support both liability defense and underwriting.

Document operations. Maintenance logs, inspection records, vendor requirements, and incident reports show carriers that the property is managed with discipline.

Align leases and vendor contracts. Requirements for renter's insurance, clear pet and device policies, and certificates of insurance from contractors help transfer risk to the appropriate parties.

Verify values. Periodic valuations and updated replacement cost estimates reduce the risk of a coinsurance penalty and demonstrate transparency to carriers.

Tell the story early. A submission that explains loss history, corrective actions, and improvements, delivered well before renewal, is more effective than one assembled at the last minute. The process is outlined in our post on how a brokerage takes an account to market, and the principle of looking at total cost of risk, not just premium, applies when evaluating higher retentions in exchange for lower premium.

Questions to Raise With Your Broker

• Which of these themes most affect our properties, and how have our terms changed over the past few renewals?
• What are our water, wind, and hail deductibles, and what would they mean in dollars for our largest properties?
• How old are our roofs and major systems, and how would a loss be settled?
• Are our values current, and are we exposed to a coinsurance penalty?
• Are assault and battery, habitability, or other liability exclusions or sublimits in our policy?
• What improvements would most strengthen our submission before the next renewal?

The Bottom Line

Habitational insurance rewards owners who manage risk visibly. The carriers that remain active in the class are looking for properties with documented maintenance, modern systems, sound fire and water controls, and credible management of liability exposures. Poms & Associates works with multifamily owners to understand how underwriters view their properties and to build submissions that reflect the work they have done, starting from the same risk assessment approach behind every program we build.

If your renewal terms have tightened and you have not reviewed what is driving the change, talk to a Poms & Associates advisor well before your next renewal.

Frequently Asked Questions

Why has multifamily insurance become more difficult to place? Habitational properties generate frequent losses from water damage, fire, and weather, along with liability claims, and construction costs and jury awards have risen. As a result, many carriers have raised deductibles, added sublimits, become selective about building age and condition, or reduced their appetite for the class.

What do underwriters look for in a multifamily property? Common focus areas include the age and condition of the roof, plumbing, electrical, and heating and cooling systems, the presence of sprinklers and leak detection, fire safety practices, security and lighting, maintenance documentation, loss history, and the accuracy of reported values.

What is a coinsurance penalty? If a property is insured for less than the percentage of value the policy requires, a partial loss may be paid at a reduced amount. For example, a building insured at half of the required value may recover only part of a covered loss, leaving the owner to bear the shortfall.

Why are lithium-ion batteries a concern for apartment owners? Batteries in e-bikes, scooters, and other devices can cause serious fires, particularly when charged indoors. Carriers have taken notice, and owners may be asked about resident policies on storing and charging such devices.

How can an owner improve its position with insurers? Documenting capital improvements, installing water leak detection, strengthening fire prevention and security practices, keeping values current, maintaining thorough operating records, and starting the renewal process early with a clear narrative all help owners present a stronger account.