How multifamily operators can offset rising insurance costs and protect their bottom line

Insurance costs are climbing—and for multifamily operators, the impact is real.

In the last few years, premiums have risen so sharply that they’re not just chipping away at net operating income (NOI)—they’re actively suppressing property values and halting deal flow. In fact, according to industry data, insurance-driven valuation drops in certain regions have reached nearly 8%.

It’s no longer a background expense. Insurance is becoming a critical factor in whether a property remains profitable—or even sellable.

From natural disasters to inflation in construction costs, operators are getting squeezed. And while you can’t control climate risk or macroeconomic forces, you can take proactive steps to protect your rent roll, stabilize your income, and reduce your exposure.

Let’s break down what’s happening, why premiums are so volatile, and what top operators are doing to protect their bottom line—even in today’s environment.

Why insurance costs are rising (and won’t slow down soon)

It’s a perfect storm: climate unpredictability, inflation, and operational risk are all converging.

Here are a few core drivers:

• Extreme weather events are more frequent, more severe, and more expensive to repair
• Construction costs have risen by 25–40% since 2020, increasing claim payouts and making insurers more cautious
• Renter fraud is on the rise, with NMHC reporting 93.3% of property managers experiencing it in 2023
• Litigation and legal exposure are increasing in several states, especially around habitability and tenant rights
  
  

Some operators report premium increases of 35% or more year-over-year, especially in places like Florida and Texas.

Worse yet, many are stuck in a lose-lose situation: file a claim and your premiums go up, or eat the cost and take a hit to cash flow. For multifamily owners, this tradeoff isn’t sustainable.

The hidden cost: uncertainty

Beyond premiums themselves, the real cost is volatility.

When insurers exit markets or raise deductibles, it becomes harder to forecast expenses—and harder to underwrite new acquisitions.

Investors start second-guessing assumptions. Lenders demand higher reserves. Buyers discount valuations.

All because one unpredictable line item—insurance—is throwing off the financial model.

What operators can do to get ahead of it

You can’t stop storms. But you can build a stronger financial buffer.

That’s why more operators are turning to risk-layering strategies that help them manage exposure beyond just the insurance policy itself.

Here are three key areas to focus on:

1. Strengthen your resident base to prevent avoidable losses

A major driver of claims (and financial losses) isn’t nature—it’s residents.

Evictions, lease breaks, unpaid rent, and property damage all eat into NOI—and often aren’t fully covered by insurance. Especially when caused by unqualified or fraudulent renters.

That’s why tenant quality is one of the most controllable risk factors in your business.

Modern operators are leaning on smarter underwriting and renter coverage programs like Cosign to bridge the gap between traditional approval criteria and real-world applicants.

When a renter doesn’t meet your credit or income threshold, Cosign can step in to provide lease coverage—ensuring you get paid, even if the resident defaults.

This not only reduces risk—it lets you approve more applicants, stabilize occupancy, and avoid unnecessary claims tied to unpaid rent.

2. Protect revenue from vacancy and default

When insurance won’t cover lost rent—or when deductibles make claims impractical—having a built-in coverage solution is key.

With Cosign, operators can select flexible protection tiers (3x, 6x, 9x, or 12x rent) that kick in without needing to touch your P&C policy. That means fewer claims, more predictable income, and less premium volatility year over year.

In other words, Cosign helps you absorb operational shocks before they hit your insurance threshold.

Think of it as a financial buffer between resident risk and property-level exposure.

3. Use rent protection to negotiate better insurance terms

Here’s something many owners overlook: when you reduce claims risk, you can negotiate better premiums.

By adopting lease coverage and ensuring every unit is backed by consistent liability protection, operators are showing insurers that they’re lower-risk portfolios.

In fact, some Cosign partners have successfully used their program documentation to push premiums down during renewal, simply because they’re covering a higher share of risk at the resident level.

When underwriters see a property with 20–40% of units backed by third-party income coverage and fast claim resolution, they treat that as a material reduction in exposure.

It’s an advantage that most competitors don’t have—and one that becomes more valuable the more volatile the insurance market becomes.

What makes Cosign different from insurance?

It’s important to clarify: Cosign isn’t a replacement for insurance. It’s a complement. A separate layer of income protection that helps reduce the need to file claims in the first place.

Instead of waiting for a resident to default and then navigating legal eviction processes, Cosign ensures landlords receive compensation within 5 business days of a valid claim.

It’s not an insurance carrier. It’s a purpose-built platform designed to help you scale occupancy and reduce income volatility without needing to sacrifice leasing standards or take on unnecessary risk.

And unlike insurance, it costs property owners nothing. Renters pay for the coverage when they wouldn’t otherwise qualify—and you get the upside.

The financial case is clear

Let’s run some quick numbers:

• Property size: 200 units
• Average rent: $1,800
• Denial rate: 40%
• Cosign conversion rate: 25% of denied renters
• Result: 20 additional leases
• Revenue gain: ~$432,000/year
• Bad debt risk: 0, because income is covered
  
  

That’s not theoretical—it’s a real pathway to growth that starts with simply making Cosign available during the leasing process.

You don’t need to overhaul your systems. You don’t need to change your underwriting. You just need to give your leasing team a fallback for applicants who are a “no” today but could be a “yes” with protection in place.

Final thought: volatility isn’t going away—but your exposure can

As long as insurance costs remain unstable, operators need new tools to reduce risk and boost predictability.

That’s exactly what Cosign was built for: protecting rent rolls, enabling better underwriting, and helping landlords take control of their income streams—no matter what’s happening in the market.

The best part? It’s fast to implement, simple to use, and doesn’t cost you anything upfront.

If insurance premiums are on your radar this year, it’s time to think beyond the policy.

Talk to us at rentwithcosign.com about how coverage at the resident level can help stabilize everything above it.