If you own multifamily property in California, you probably don’t need an industry report to tell you something has changed. You’ve seen it firsthand in your renewal (or non-renewal) notices. Insurance premiums that once crept up modestly are now jumping aggressively, year after year now, sometimes without a single claim to justify the increase. For many owners, insurance has quietly become one of the most frustrating and fastest-growing operating expenses.
This isn’t a temporary spike, and it isn’t isolated to a few unlucky properties. It’s the result of broader shifts in how insurers view risk, and California happens to sit squarely in the crosshairs.
Why Insurance is Getting More Expensive in California
Insurance carriers are reassessing risk nationwide, but California multifamily properties come with a unique set of challenges. Earthquake exposure, wildfire risk in surrounding regions, aging infrastructure, and dense housing all factor into underwriting decisions. Even buildings far from hillsides or fault lines are being priced with regional risk in mind.
Inflation has only accelerated the issue. When construction costs rise, claim payouts rise with them. Add rising legal expenses and more aggressive litigation, and insurers are paying out more per claim than ever before. Their response has been predictable: higher premiums, higher deductibles, tighter underwriting, or exiting the market altogether.
For owners, this often feels like being penalized for factors entirely outside your control. In many cases, that’s not far from the truth.
Claims History, Building Age, and the Unforgiving Math of Risk
One of the most important – and misunderstood – drivers of premium increases is claims history. Insurers today are far less tolerant of frequent, smaller claims than they were even a few years ago. Water damage claims, in particular, have become a red flag. A handful of plumbing incidents over a short period can dramatically narrow your insurance options.
Building age and system condition are also under the microscope. Older properties aren’t automatically viewed as high risk, but outdated plumbing, electrical systems, roofs, and fire safety infrastructure raise concerns. An insurance broker I trust recently told me that some admitted carriers won’t even quote apartment buildings in some areas of Los Angeles older than 25 years right now. Insurance carriers are betting on what could happen next, not what hasn’t happened yet.
From an owner’s perspective, this creates a tough dynamic. Capital improvements are expensive, and yet failing to make them can cost you more in the long run through higher premiums and limited coverage options. We see insurance carriers requiring new or updated electrical panels and subpanels often now for many of our clients who own older buildings. In today’s insurance environment, preventative maintenance and targeted upgrades are no longer just operational best practices, but should be part of your insurance strategy.
What Owners Can Still Control in a Tough Insurance Market
While you can’t control regional risk models or global reinsurance markets, you do have influence over how your property is presented and perceived. Clear documentation, accurate building summaries, updated maintenance records, and thoughtful risk management matter more than ever.
Insurers want confidence. They want to know that your property is actively managed, that issues are addressed before they become claims, and that there won’t be surprises after binding coverage. Properties that demonstrate discipline and transparency consistently perform better during renewals, even in a hard market.
Timing also matters. Waiting until the last minute to address insurance renewals significantly limits your leverage. Starting early allows time to correct underwriting concerns, explore alternative carriers or structures, and avoid rushed decisions that lock in unfavorable terms.
Insurance may never be the most exciting topic in multifamily ownership, but it has become one of the most strategic. Treated passively, it can quietly erode your returns year after year. Managed proactively, it becomes another variable you can plan for rather than react to.
Rising premiums are now part of LA’s multifamily landscape. The goal isn’t to eliminate increases entirely – it’s to understand them, anticipate them, and position your property as a risk insurers are still willing to compete for. In today’s market, that distinction matters more than most owners realize.
Kyle Crown is the President of Los Angeles Property Management Group. Prior to joining LAPMG in 2013, he worked as an Investments Analyst for KTR Capital Partners. He holds a Bachelor’s of Science in Business with a focus in Real Estate and Legal Studies from the University of Pennsylvania’s Wharton School of Business.
Visit their website at: losangelespropertymanagementgroup.com, or you may contact them at: Info@lapmg.com or 323-255-9400.