Why Are Apartment Owners Paying So Much More for Insurance?

Why Are Texas Apartment Owners Paying So Much More for Insurance — and Will It Get Any Better?

If you own apartment property in Texas and your insurance costs have felt shocking over the past few years, you are not imagining it. Texas homeowners’ insurance rates climbed nearly 19% in 2024, according to the Texas Department of Insurance, slightly down from more than 21% the previous year. Federal Reserve For apartment owners, the picture is even more stark: the average monthly insurance cost per apartment unit rose from $39 in 2019 to $68 in 2024, an increase of more than 75%. Honigman That is not a temporary blip. It is a structural shift in the Texas insurance market, and understanding what is driving it is the first step toward managing it wisely.

What Is Driving the Increase

Several forces have come together to push Texas commercial property insurance to levels that were difficult to anticipate even a few years ago.

The biggest driver is weather. Texas has become one of the most expensive states in the country to insure against storm-related losses. Insurance company representatives told Texas lawmakers that the state has seen a significant increase in both the frequency and severity of claims over the past several years, and that Texas is a very high-expense place to do insurance. Inszone Insurance Hailstorms, severe thunderstorms, flooding, and named windstorm events along the coast have all generated substantial claim volumes that insurers are now pricing into every policy renewal across the state, including in areas that have not experienced a direct loss.

Rising construction and repair costs have added to the pressure. When a storm damages your apartment complex, the cost to restore it is significantly higher than it was five years ago, due to inflation, tariffs on imported building materials, and ongoing labor shortages in the skilled trades. Insurers are pricing that reality into every policy they write.

Fewer Carriers Means Less Competition at Renewal

One of the most consequential developments for Texas apartment owners is not just rising rates. It is the shrinking number of carriers willing to write coverage at all. Foremost, a division of Farmers Insurance, is scaling back its presence in Texas, and Progressive has restricted selling homeowners policies, claiming storms in Texas accounted for nearly 40% of the company’s losses in the second quarter of fiscal 2024. Steadily

When carriers exit a market or tighten their appetite, the remaining insurers face less competitive pressure to keep rates reasonable. For apartment owners shopping their policy at renewal, fewer options almost always translates to fewer choices and less favorable terms. The number of Texas FAIR Plan applicants has grown from 66,512 in 2021 to over 121,000 in early 2025, with projections reaching 135,000 by year end, Stanton Ins which reflects how many property owners are struggling to find coverage in the standard market.

This is precisely why working with an independent insurance agency has become so important. An independent agent can access multiple carriers at once, which means you are not limited to whatever one company happens to be offering at renewal.

What to Expect from the Legislature

The Texas Legislature made insurance affordability a priority in its 2025 session. Texas lawmakers filed over 600 bills related to property and casualty insurance. Stanton Ins The results were meaningful in some areas but modest overall for commercial property owners. One bill that did pass, SB 213, prohibits insurance companies from requiring customers to bundle their home and auto insurance with the same provider, Onarchipelago which is a consumer protection win but does not directly address what apartment owners are paying for commercial coverage.

The core challenge is that capping rate increases does not change the actual cost of weather-related losses. And with the Texas Legislature only meeting every two years, with the next session set to begin in January 2027, Stanton Insmeaningful regulatory intervention is unlikely in the near term. We think the most practical path forward for apartment owners is proactive coverage management rather than waiting on relief that may take years to materialize.

What This Means for Your Bottom Line

The Federal Reserve studied this issue directly, and the findings are important for any apartment owner watching their operating margins. A dollar increase in property insurance costs reduces property owners’ net income by about 72 cents. Honigman You can pass some of that cost through to tenants over time, but the process is slow and market conditions place real limits on how much rents can absorb.

This makes your coverage decisions more financially significant than they have ever been. A property that is underinsured and suffers a major loss is not just an operational setback. It can erode years of equity and cash flow in a single event.

Practical Steps You Can Take Before Your Next Renewal

The market is not going to get dramatically cheaper in the near term, but there are real steps that can meaningfully improve your position.

The first is getting a current replacement cost valuation on your building. Given how much construction costs have risen, many apartment properties are still insured at limits set several years ago that no longer reflect what it would actually cost to rebuild. If your policy limit is 20 to 30 percent below actual replacement cost and you suffer a total loss, you fund that difference personally.

The second is reviewing your loss of rental income coverage. If storm damage forces tenants out of units, your mortgage and operating expenses do not stop. Make sure your coverage period is long enough to account for a realistic recovery timeline, because major storm damage can take 12 to 18 months to fully remediate.

The third is exploring mitigation discounts. Several carriers are offering meaningful premium reductions for properties with documented storm mitigation improvements, including impact-resistant roofing, updated HVAC systems, and monitored fire suppression. These investments can pay back through lower premiums faster than many owners expect.

Finally, shop your policy with an independent agent at every renewal. In a market where carriers are constantly adjusting their appetite and pricing, an independent agency like Donegan Insurance in Seguin can compare options across multiple carriers to make sure you are getting the best available coverage for what you are paying.

We work with apartment owners across Central Texas, and we are always glad to sit down and walk through your current coverage to make sure it still reflects what your property is actually worth and what it would take to recover if something went wrong.

Frequently Asked Questions

Q: Why did my apartment building insurance go up so much? 

A: Texas has seen some of the steepest property insurance rate increases in the country, averaging around 21% in 2023 and 19% in 2024 according to the Texas Department of Insurance. For apartment owners specifically, per-unit costs have risen more than 75% since 2019. The primary drivers are weather-related losses from hail and severe storms, rising construction costs, and carriers reassessing their exposure across the state.

Q: Are insurance companies leaving Texas? 

A: Some are scaling back their presence. Foremost has reduced its Texas footprint, and Progressive has restricted writing new property policies in the state. Fewer carriers competing for your business at renewal tends to push rates higher. Working with an independent agent who has access to a broad range of carriers is one of the most effective hedges against this trend.

Q: Will the Texas Legislature help lower apartment insurance costs? 

A: The 2025 session produced some consumer protections but limited relief specifically for commercial property owners. The next legislative session does not begin until January 2027, so meaningful regulatory intervention is not likely in the near term. The most effective strategy right now is proactive coverage management on your end.

Q: How can I lower my apartment building insurance premium in Texas? 

A: The most effective options are making documented storm mitigation improvements to your property, maintaining a clean claims history, consolidating multiple properties with one carrier where possible, and working with an independent agent who can shop the full market at each renewal. It is also worth confirming that your coverage limits are current and not based on outdated construction costs.

Q: What happens if my insurer drops my apartment building coverage? 

A: You have options, but acting quickly matters. Texas has a FAIR Plan for property owners who have been declined by at least two admitted carriers, though FAIR Plan coverage tends to be more expensive and less comprehensive than standard market policies. A better first step is working with an independent agency to identify an admitted or surplus lines carrier before a non-renewal takes effect. We are glad to help with that process.