San Diego Multifamily Owners Are Facing Higher Insurance Costs. Here’s What That Means for Your Property
A practical look at premiums, underwriting shifts, and what they mean for apartment owners
By Nick Hernandez ·
If you own apartments in California, insurance probably feels very different than it did a few years ago.
Many owners who have never made a claim are now seeing renewals that are significantly higher than what they paid historically. In some cases the premium has doubled. In others the price is similar but the deductible is higher, coverage is tighter, or underwriters are asking far more questions than before.
Insurance is not the only operating cost that matters. It is not single handedly determining property values. But for many multifamily owners in 2026, it has become one of the more frustrating and less predictable line items on the operating statement. Buyers and lenders are paying closer attention as well, which makes insurance relevant anytime refinancing, valuation, or sale timing comes into the conversation.
This is a practical look at where insurance costs sit today, why California feels it more acutely, and how owners are responding.
What the data actually shows
The most credible broad dataset on apartment insurance costs comes from the Federal Reserve’s analysis of multifamily operating statements.
In its September 2025 report, the Fed found that average monthly insurance costs per unit rose meaningfully over the last several years. Nationally, the average increased from roughly $39 per unit per month in 2019 to about $68 in 2024, adjusted for inflation.
In the San Diego metro, that same 2024 figure was approximately $94 per unit per month.
That number is not meant to represent your exact premium. Every building has a different risk profile based on age, construction type, loss history, location, and building systems. Still, it is a useful benchmark that shows California markets like San Diego sit above the national average.
The Fed’s analysis also suggests that most of these insurance cost increases were absorbed by owners rather than fully offset through rent growth. Rents helped cushion expenses, but they did not eliminate the increase entirely.
For many owners, that lines up with reality. Insurance is not derailing the market, but it is a steady pressure on net operating income.
Why California owners feel it more
Three structural factors are shaping insurance pricing in California.
Reinsurance pricing tied to wildfire risk plays a major role. Even if your property is nowhere near a high fire zone, California is often priced as a statewide risk pool. Higher reinsurance costs flow through to carriers, which respond by tightening underwriting and raising premiums.
Carrier selectivity is another factor. Some admitted carriers have reduced exposure in parts of the state, pushing more policies into surplus lines markets. These markets can provide coverage, but pricing and terms are often less favorable than what owners were used to in prior cycles.
The growth of the FAIR Plan is also a market signal. While most multifamily properties are not insured directly through the FAIR Plan, its expansion reflects reduced appetite among traditional insurers in certain segments. Insurance is still available. It is just being priced with more caution and more differentiation between properties.
How buyers and lenders look at insurance today
Insurance is increasingly treated as a variable assumption rather than a static expense.
Buyers often underwrite insurance above the trailing twelve months, assuming some level of cost inflation at renewal. This is not alarmism. It is conservative underwriting.
Deductibles also carry more weight. A higher deductible shifts more risk back to the owner and can affect how buyers view the stability of future cash flow.
Lenders are asking more questions about coverage, carrier strength, and renewal likelihood. They want to see clean, bindable policies without unusual exclusions that could create risk later. Uncertainty around insurance can influence loan terms, leverage, and reserve requirements.
This is simply how risk is being priced today.
A simple way to see the impact
Most owners feel insurance increases as an annual frustration. Buyers experience them through valuation math.
If a 25 unit property sees insurance rise by $300 per unit per year, that is $7,500 less NOI.
At a 5.00 percent cap rate, that reduction alone equates to roughly $150,000 of value.
That does not mean a deal falls apart. It does mean insurance costs quietly shape pricing conversations alongside property taxes, maintenance, utilities, and payroll.
What owners are doing in response
Owners who are navigating this well are being proactive.
They start renewals earlier, giving brokers time to explore options instead of reacting to last minute quotes.
They maintain a clean property file with documentation on roofs, plumbing, electrical systems, capital improvements, and loss history. Underwriters price clarity more favorably than ambiguity.
They address common red flags before carriers raise them. Deferred maintenance, unclear past claim remediation, or undocumented work tends to show up in pricing sooner or later.
They also underwrite their own properties conservatively, even if they are not planning to sell. Running the numbers with a higher insurance line item helps owners understand true cash flow and return on equity today.
A note specific to San Diego
San Diego owners deal with local dynamics layered on top of the statewide picture.
Coastal exposure affects building components. A large portion of the housing stock is older. Many properties are small to mid sized, where a single claim can disproportionately affect loss history.
That is why clean records and the ability to clearly explain the story of the property matter more than they used to.
Closing thought
Insurance costs are not the story of the California multifamily market in 2026. But they are an important part of the operating landscape.
For many long term owners, especially those who never made a claim, higher renewals feel frustrating and unexpected. That reaction is understandable.
The practical response is preparation. Treat insurance as a real operating input, document your property well, and understand how buyers and lenders are viewing that line item today.
If you want to talk through how insurance is showing up in underwriting for your specific property, feel free to reach out. Unit count, year built, and basic loss history usually tell most of the story.
I work with multifamily property owners throughout San Diego and Southern California, helping them understand market conditions, operating costs, and timing decisions.
— Nick Hernandez
San Diego Multifamily Broker