This article was posted on Saturday, Feb 02, 2013

WASHINGTON,DC – The cost to insure apartments increased by 9.5 percent between 2011 and 2012, marking the second consecutive year of rising insurance expenditures according to the National Multi Housing Council’s (NMHC) Apartment Cost of Risk Survey (ACORS). The survey covers data from more than one million apartment units, the largest number of units covered by the survey to date, operated by 55 apartment firms, tracking three principal components of insurance premiums: property, general liability and workers’ compensation. The 9.5 percent increase in 2012 came entirely from property risk costs, with general liability and Workers’ Compensation costs staying virtually unchanged from 2011.

“Respondents noted that their greatest challenges in 2012 came from obtaining adequate and affordable coverage in traditional catastrophe risk zones. In fact, catastrophe exposed properties were the major drivers of the increase in premium costs and higher deductibles,” said Rick Haughey, NMHC’s Vice President of Property Operations and Technology. “WithU.S.catastrophe losses in 2012 expected to be moderately higher than average due to Hurricane Sandy, the outlook for insurance costs in 2013 remains uncertain. This uncertainty mitigates what would be downward pressure on 2013 catastrophe rates due to strong underwriting capacity for primary insurers and reinsurers.”

Additional key findings:

  • The mean (non-weighted) average for the total cost of risk increased 9.5 percent in 2012, driven by an increase in property cost of risk, which accounts for 70 percent of the average apartment firm’s total cost of risk.
  • The mean average property cost of risk increased by 10.4 percent and average per occurrence deductibles increased to $118,000 from the unusually low average deductible of $66,000 in 2011.
  • The mean average general liability cost of risk remained virtually unchanged in 2012 after a 9 percent increase last year.
  • The mean average Workers’ Compensation cost of risk in 2012 also remained similar to 2011 at $1,038 per full-time employee.
  • Property terrorism insurance take-up rates increased to 91 percent in 2012, compared to 85 percent in 2011. A slight decrease in property terrorism insurance rates was also reported.

About the Survey

The ACORS contains information about property, general liability, umbrella, workers compensation, D & O, professional liability, employment practices, environmental, and newly added insurance lines including terrorism and cyber liability. Fifty-five firms representing over one million apartment units supplied data on rates, deductibles, retentions, key coverage terms, claims history and more for the key lines of coverage.

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Firms that completed the survey can receive exclusive access to the full data set, along with the report analysis by Conning Research and Consulting on behalf of NMHC. Non-participating NMHC members can download an executive summary and a PowerPoint summarizing the results at

Editor’s Note:  You’ll want to call AOA’s Group Insurance Program at (800) 227-7434 where members are saving money on insurance every day!  Our group policy is one of the most competitive program for apartment owners and property management companies!

 Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC’s members are the principal officers of firms engaged in all aspects of the apartment industry, including owners, developers, managers and financiers. One third of Americans rent their housing, and more than 14 percent live in a rental apartment. For more information, contact NMHC at 202-974-2300 or visit NMHC’s web site at


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