Property management insurance in 2026: Accounting for the spike

Key Takeaways

• The National Apartment Association's 2026 data shows operators nationally budgeting roughly $275 to $356 more per unit than in previous years, and insurance has grown from 1.95% of multifamily revenue in 2000 to 4.78% by 2024, according to Federal Reserve data cited in the same report.

• The 2026 picture is more mixed than a simple continued spike. Some carriers and markets are seeing premiums decrease, including large insurers in California cutting rates by roughly 9% even where they were approved for a 7% increase, while other metros are still recording 15 to 20% year-over-year increases.

• Deductibles are rising even in markets where premiums are falling, which means the PM accounting question is not just "is the premium line item bigger," but "is the effective cost of risk (premium plus expected uninsured loss exposure) actually declining."

• Houston-area rates now exceed $1,200 per unit in some cases, according to NAA's metro-level data, illustrating how dramatically the national average obscures market-specific severity, the same pattern seen in the 2026 rent growth data.

• For owner reporting, insurance should never be budgeted as a flat prior-year-plus-inflation estimate. The volatility in both directions (some markets easing, others still spiking) makes a market-specific renewal quote, obtained early, the only reliable input for an accurate NOI forecast.

An owner sees their insurance line item jump 18% year over year and assumes the PM company either made an error or isn't shopping the policy hard enough. In some markets, that assumption is fair. In others, the PM company got a genuinely good renewal and the market itself moved that much. The only way to know which is true is a specific, current quote, not a general sense of "insurance is expensive right now."

Numetix takes an expert-led, AI-powered, and human-in-the-loop approach to owner budget preparation, building insurance line items from actual current renewal data rather than a flat percentage escalation carried forward from last year. This guide covers what the 2026 insurance data actually shows and how to account for it correctly in owner reporting.

Quick Answer: How much have property insurance costs risen for multifamily in 2026?

• According to NAA's 2026 report, operators nationally are budgeting roughly $275 to $356 more per unit compared to previous years, with insurance now representing 4.78% of multifamily revenue nationally, up from 1.95% in 2000.

• The picture varies significantly by market: some insurers are actually decreasing rates in certain regions even as others post double-digit increases, and deductibles are rising in both cases, meaning the premium line alone doesn't capture the full cost of risk.

• High-risk metros like Houston are seeing per-unit costs surpass $1,200 annually, while other markets are experiencing genuine relief, which is why owner budgets need current, market-specific quotes rather than a flat percentage assumption applied portfolio-wide.

What the 2026 insurance data actually shows

The National Apartment Association's most recent insurance cost report, drawing on National Summary Income/Expense IQ data alongside Federal Reserve figures, puts the long-term trend in stark terms: insurance, hazard, and liability coverage have grown from 1.95% of multifamily revenue in 2000 to 4.78% by 2024, nearly two and a half times the proportional cost. Nationally, operators are now budgeting roughly $275 to $356 more per unit than in prior years. The report is explicit that this is no longer a marginal line item; in specific high-risk metros like Houston, per-unit insurance costs now surpass $1,200 annually, a figure that materially changes the NOI math for any property in that market.

Why 2026 is more nuanced than a simple continued spike

Unlike the sharpest years of the insurance crisis (Minneapolis Fed data showed premiums rising 45% on average from 2023 to 2024 alone), 2026 industry reporting shows a genuinely mixed picture. Some large insurers, including carriers in California, have been approved for rate increases around 7% but are actually implementing decreases of roughly 9% in practice, reflecting increased capacity in the reinsurance and excess-and-surplus lines market. At the same time, other metros continue to see substantial increases: broader industry data shows a meaningful share of metros still recording 10% or greater year-over-year premium increases. The practical implication is that a national average, in either direction, tells a PM company very little about what a specific property's renewal will actually look like.

Why deductibles matter as much as premiums

Even where headline premiums are stabilizing or falling, deductibles have continued rising in many markets, which means the effective cost of risk (the premium paid plus the owner's expected exposure to a loss below the deductible) may not be improving even when the premium line item looks better. A policy with a lower premium but a deductible that doubled is not necessarily cheaper insurance; it is a different risk allocation, shifting more of the exposure to the owner in the event of a claim. Owner reporting that only tracks the premium paid, without noting deductible changes, gives an incomplete picture of what actually changed in the property's risk position year over year.

How to account for insurance volatility in owner budgets

The most reliable practice is to build the 2026 or 2027 owner budget's insurance line from an actual renewal quote obtained 90 days before the policy renews, not from a flat percentage escalation applied to last year's premium. Given how differently markets are moving, a portfolio spanning multiple metros needs a per-property insurance assumption, not a single blended growth rate. Where a renewal quote isn't yet available at budget preparation time, use the most recent comparable renewal in the same metro as the estimate, with a note to the owner that the figure will be finalized once the actual quote is in hand, connecting directly to the year-end accounting checklist's insurance renewal timeline.

Frequently asked questions

Should insurance cost increases be passed through to tenants?

For residential properties, insurance is typically an owner operating expense factored into the overall rent-setting decision rather than a direct pass-through to tenants, unlike commercial CAM structures where insurance can be a specifically billed shared expense. Whether and how much of an insurance increase gets reflected in rent pricing is a business decision for the owner, informed by the accounting showing the actual cost increase, not an automatic pass-through mechanism in most residential leases.

How does rising insurance affect NOI calculations?

Insurance is an operating expense, so a rising premium directly reduces NOI unless offset by revenue growth or another expense reduction. Given that 2026 rent growth is running at a modest 1.4% nationally while insurance in some markets is still rising in double digits, the combination can compress margins meaningfully for properties in high-insurance-cost, low-rent-growth markets simultaneously. The NOI guide covers how to build both the revenue and expense sides of the forecast with current market data.

Is it worth switching insurance carriers annually to chase lower premiums?

Not automatically. Frequent carrier switching can affect a property's claims history continuity and, in some cases, its eligibility for certain coverage or pricing tiers that reward long-term relationships. The better practice is to shop the market seriously at each renewal (obtaining multiple competitive quotes, not just accepting the incumbent carrier's renewal offer) and switch when the terms, not just the headline premium, genuinely improve, factoring in deductible changes and coverage scope alongside the price.

For property management firms building 2026 and 2027 owner budgets against a genuinely volatile insurance market, our accounting services build insurance line items from actual current market data, expert-led, AI-powered, and human-in-the-loop.

See the complete guide to property management accounting for the full owner budgeting and NOI forecasting framework.