Owners of multi-family housing are facing a challenging year as big changes in the commercial property insurance market set in.

Major insurers offering habitational insurance covering multi-family dwellings are changing pace, largely due to massive losses over the past few years.

It is leaving many multi-family building owners scrambling to find a new commercial property insurance agency before their current policies run out.

What Is Habitational Insurance And Who Needs It?

Habitational insurance is a form of commercial property insurance that specifically covers multi-family housing units like apartment complexes, condos, duplexes, and anything similar where more than one family resides in the same building.

This policy, sold only by a commercial property insurance agency, provides coverage against damage like wind, rain, and hail damage, and other damage that can happen to the building itself.

What Is Happening With Habitational Insurance?

In a nutshell, many of the main commercial carriers offering habitational commercial property insurance products are being forced to re-evaluate their coverage and modify their products because re-insurers are declining to cover these larger family dwelling buildings.

This is taking place to a large part because of consecutive years of astronomical losses, especially in 2020 and 2021.

Claims for wind and hail damage have accounted for a large portion of these losses, but increased incidence of wildfires, hurricanes, tornadoes, and other storm damage have all been contributed.

The net effect flows down to the main carriers from whom retail commercial property insurance agencies get the products they offer to their local clients, so this change will undoubtedly affect much of the commercial insurance market in the country.

For those policies that they can offer, top insurers are increasing policy costs considerably and some are now refusing to insure certain buildings based on age, location, and other factors without a complete renovation to update these buildings and make them more resilient to the losses that are covered by the policy.

In many cases, this means completely gutting the buildings and rebuilding according to the current local building code requirements.

What Can Multi-Family Building Owners Needing Habitational Insurance Do?

Most importantly, multi-family unit owners must immediately meet with their commercial property insurance providers and discuss how these substantial changes will affect them, as it could leave some owners without coverage.

Some major carriers plan on putting these changes into effect as early as May 2022.

Commercial property insurance agencies are in the process of learning that buildings which no longer fit the carrier’s requirements will not be renewed, creating a sudden need for property owners and their agencies to find some other solution.

Multi-Family Owners Must Act Now

With major, recent losses creating a commercial property insurance nightmare in the habitational insurance sector, owners of all multi-family dwellings are encouraged to reach out to their insurance agencies right away to discuss the issue.

Whether a carrier has already stopped covering a property or plan to in the near future, property owners should avoid waiting to see what happens or otherwise end up in the dangerous position of being uninsured while headed into another storm season.

The respective commercial property insurance agency will advise on available options and how to either renew current policies or find another one for the coverage that is needed.