Why Are My Property Insurance Costs Skyrocketing?

Rising property insurance costs are one of the biggest challenges landlords and property owners face today. To help answer key questions about what’s driving premiums higher (and what you can do about it), Real Property Associates recently hosted a webinar with FirstMark Insurance Group.

Dave Taylor and his team of brokers joined RPA co-founder Jay Young to share insights on current market trends, risk management, and strategies for protecting your investments.

Insurance Policy Requirements and Carriers

One of the first questions owners ask is what type of policy they actually need. Dave explained that properties with five or more units require a commercial policy instead of personal lines. This distinction matters because coverage limits, liability, and carrier options vary significantly.

For tenants, the team stressed the importance of renters’ insurance with at least $100,000 in liability coverage. These policies often handle claims without involving the landlord’s policy. On the carrier side, FirstMark represents 10–12 preferred companies for personal lines, 8–10 for newer commercial properties, and more than 20 for older buildings, giving owners access to a wide range of options.

Insurance Market Trends for Landlords

The insurance market has changed dramatically in recent years. Premiums climbed steeply, and many carriers pulled back from higher-risk segments. Jay noted that landlords now face a “new normal” where rates and requirements are very different from just a few years ago.

The FirstMark team explained that landlords need to understand both personal and commercial lines to make informed choices. This means understanding how carriers assess risks, identifying essential coverage, and knowing when it’s worthwhile to explore alternatives.

Stabilizing Insurance Rates Insights

The good news is that after two years of sharp increases, insurance rates are beginning to stabilize. Still, the details matter. The age and condition of a property often determine how a carrier prices risk. Surprisingly, newer buildings can sometimes face higher rates than older ones.

Carriers are also scrutinizing property conditions more closely. Keeping systems updated (like roofs, plumbing, and electrical) can expand coverage options. Jay recommended that landlords consider getting bids for repairs or upgrades before renewals to strengthen their insurance position.

Landlord Risk Management Strategies

The panel agreed that the biggest risk for landlords is not a small claim, but a catastrophic liability loss. A major lawsuit could threaten your entire portfolio.

To mitigate this risk, landlords should:

• Hold properties in an LLC or similar entity.
• Obtain an umbrella policy for added liability protection.
• Regularly review and update coverage to match property values and exposures.

As Dave explained, the goal is to prevent a single claim from jeopardizing years of investment growth.

Insurance Strategies for Rental Properties

Owners also need to think strategically about coverage and costs. For example:

• Replacement value: Carriers now often cap replacement costs at 25% for rental properties, so accurate valuations are critical.
• Deductibles: Higher deductibles can lower premiums, but frequent claims will drive up long-term costs.
• Property Maintenance: Regular updates and repairs remain one of the best ways to reduce premiums on commercial properties.

The key takeaway: balancing cost savings with adequate coverage is essential for long-term success.

Insurance Claims and Carrier Implications

Submitting an insurance claim isn’t always straightforward. Dave cautioned that even one or two claims in a short period can make it harder to secure coverage or may lead to higher future premiums.

For commercial policies, recent claims often push properties into the surplus market, where coverage is more limited and expensive. Marie also highlighted a newer carrier in Washington, Honeycomb, which offers both admitted and non-admitted options for rental property coverage.

Old Property Insurance Challenges

Older properties bring unique insurance challenges. Buildings over 25 years old are often harder to insure, especially for habitational risks. However, requiring tenants to carry renters’ insurance can offset some risk. While $100,000 in liability coverage is common, experts recommend raising the limits to $300,000 or $500,000, as the cost difference is minimal.

Dave also explained that rate increases in Washington must be filed and approved by the state insurance commissioner. This review process can take 18 months and often results in lower increases than carriers initially request.

Earthquake Insurance and Risk Factors

The webinar also addressed earthquake coverage—a critical yet often overlooked issue in the Pacific Northwest. Most carriers no longer offer earthquake endorsements, but standalone policies from Palomar and Giovera remain viable options. The team recommended keeping deductibles at 5% or lower to avoid excessive out-of-pocket costs.

Carriers are also cautious about insuring properties with certain high-risk tenants, including marijuana businesses, hookah lounges, and some manufacturing uses. Even martial arts studios can be flagged. For landlords, understanding these restrictions is key to maintaining coverage.

Protecting Your Investments with RPA

Property insurance is more complex than ever, but proactive management makes a big difference. From structuring ownership correctly to maintaining buildings and choosing the right carriers, landlords have real opportunities to protect investments and stabilize costs.

At Real Property Associates, we partner with trusted experts like FirstMark Insurance Group to bring our clients the latest insights and practical strategies. If you missed the webinar, we encourage you to watch the full session to dive deeper into these topics.

If you’d like personalized guidance for your own portfolio, contact us today. Our team is here to help you navigate the Seattle market with confidence.