There’s a specific moment I’ve watched play out dozens of times this year. An owner opens their renewal quote, reads the number, reads it again, and calls their broker with some version of the same question: “Is this a typo?”
It’s not a typo. A building that paid $28,000 two years ago comes back at $55,000. A fourplex that was $6,000 is suddenly $11,500. And the first thing most owners do — understandably — is assume something is wrong with them. A claim they forgot about. A mistake on the policy. A broker who stopped trying.
Usually, none of that is true. What’s true is that the entire California habitational insurance market repriced underneath you, and nobody sent a memo. This post is the memo.
The short answer
Your renewal doubled because the companies that used to compete for your building stopped competing, at the same time the cost of everything an insurance policy pays for went up. Fewer sellers, more expensive product. Everything below is detail — but that’s the mechanism.
Now the detail, because it matters for what you do next.
1. The biggest carriers left the room
For decades, LA apartment buildings were mostly insured by big, familiar admitted carriers, and those carriers competed with each other. That competition is what kept your premium flat for years at a time.
That era ended abruptly. State Farm — historically one of the largest writers of apartment buildings in California — moved to non-renew tens of thousands of commercial apartment policies statewide and stopped writing new ones. Other major carriers didn’t make headlines; they just quietly narrowed their appetite to newer buildings, raised rates on what remained, or stopped quoting habitational business altogether.
Here’s why that hits your renewal even if your carrier stayed: every non-renewed building goes shopping. Thousands of displaced buildings flooded the remaining markets at once, and the carriers still writing suddenly had their pick. When an underwriter has two hundred submissions on their desk, they don’t need to sharpen their pencil for anyone. Supply and demand — except the product is your coverage.
[PM QUOTE SLOT A — placement suggestion: a property manager on what they’re hearing from owners. Example shape: “Two years ago insurance was a line item nobody discussed at our owner meetings. Now it’s the first question on every call.” — Name, Title, Company]
2. Where buildings actually get placed now — and why it costs more
A decade ago, only a small slice of LA apartment placements went to the E&S (excess & surplus) market — the specialty carriers that price harder risks individually. Today it’s a large share of all habitational placements, and for older buildings it’s often the only market.
E&S coverage isn’t worse — some of the strongest carriers in the world operate there — but it’s priced differently. Admitted carriers priced buildings in broad pools, which meant well-maintained older buildings quietly benefited from averaging. E&S underwriters price your building specifically: your 1962 plumbing, your loss history, your roof’s age. For a lot of LA housing stock, honest building-by-building pricing is simply a bigger number than pooled pricing was.
And below the surface there’s reinsurance — the insurance that insurance companies buy. Global reinsurance costs rose sharply after years of catastrophe losses, and every carrier writing in California passes that through. You’re paying a slice of hurricanes and wildfires you’ve never seen, because your carrier is.
3. The quiet culprit: water, not wildfire
Owners assume this is all about wildfire. For apartment buildings in the LA basin, wildfire is part of the reinsurance math — but the loss category actually bleeding carriers on habitational is water damage. Supply line failures, slab leaks, unit-to-unit water intrusion, decades-old galvanized or polybutylene plumbing letting go at 2 a.m.
Water losses are frequent, expensive, and — from an underwriter’s chair — predictable in older buildings that haven’t been re-piped. This is why two nearly identical 1970s buildings can get wildly different quotes: one has documented plumbing updates and the other doesn’t. It’s also the closest thing to good news in this article, because unlike reinsurance markets, your building’s water risk is something you can actually change — and underwriters reward it. (We’ll publish a full underwriter’s-wishlist guide on this soon.)
4. Rebuild costs and lawsuits both got more expensive
Two more quiet multipliers:
Construction inflation. Your policy’s job is to rebuild the building, and rebuilding costs far more than it did five years ago — materials, labor, and LA’s permitting timeline all push replacement costs up. Carriers have been correcting years of under-valued buildings, so even at the same rate, a corrected valuation means a bigger premium. If your square-footage or valuation numbers were stale, part of your increase is that correction.
The liability environment. California’s habitability litigation climate is among the most active in the country — LA is arguably the most regulated rental market for landlords anywhere, a point multifamily specialist Everett Wong makes in his running recaps of LA’s apartment regulatory changes. Liability claims against apartment owners — habitability suits, security claims, slip-and-falls — have grown in both frequency and settlement size, and the liability portion of your package repriced to match.
[PM QUOTE SLOT B — placement suggestion: a PM on the operational reality. Example shape: “We tell owners the same thing about insurance we tell them about deferred maintenance — the building that documents everything gets treated differently.” — Name, Title, Company]
What you can’t control — and what you absolutely can
You can’t control reinsurance markets, carrier appetite, or the litigation climate. Accepting that saves a lot of wasted energy.
Here’s what you can control, in rough order of impact:
Start earlier than feels necessary. In this market, 90–120 days before renewal is the new normal. Starting early is the difference between choosing among options and accepting whatever’s left. (If you’ve already been non-renewed, we wrote the step-by-step playbook for exactly that.)
Make your building documentable. Loss runs, a clean statement of values, dated proof of plumbing/roof/electrical updates, photos. Underwriters give their best terms to submissions that answer questions before they’re asked.
Fix the water story. Automatic shutoff valves, leak sensors, supply-line replacement, a re-pipe if the building needs it. These are the improvements with the most direct line to better terms — and they prevent the claims that make next year worse.
Work with someone who lives in this niche. A generalist shopping your building to two markets and a habitational specialist running a coordinated process across admitted, E&S, and FAIR Plan options are not the same service, and in this market the gap between them is measured in tens of thousands of dollars.
Right-size, don’t strip. There are smart ways to take risk — higher deductibles, restructured limits — and there are ways that just move the loss onto your balance sheet. Cutting loss-of-rents coverage on a building that is your income is the second kind.
The bottom line
Your renewal doubled because the market repriced, not because you failed at something. But two owners in identical buildings will pay very different numbers over the next three years — and the difference will come down to timing, documentation, and who’s running the placement. Remember what’s actually at stake: insurance is now one of the largest operating expenses on your P&L, and every dollar of expense flows straight through NOI to your building’s value — a point LA property managers like the team at BFPM have made well in their guide to reducing multifamily operating expenses.
If your renewal number made you sit down, send it to me. I’ll give you an honest read on whether it reflects the market or reflects a placement that wasn’t really worked — no cost, no obligation. Sometimes the answer is “that’s actually a fair number, keep it.” You deserve to know either way.
[Get an honest second opinion →] (Request an Apartment Building Quote)
Broadway Insurance Agency — insurance for real estate investors, from a real estate investor. Licensed in CA, OH, PA, NC, IL, FL, and AZ.
