When the insurance crisis is discussed, it's often in the context of impacts to homeowners. But renters are also feeling the pain.
Alongside homeowners insurance premiums, costs for multi-family rental property policies and other insurance required in the business are also on the rise. That has big implications for tenants – especially those in subsidized or affordable housing. That’s according to a new report from the Climate and Community Institute, a nonprofit think tank.
Lead author Alex Casey said the insurance crisis is also a “housing affordability crisis because it is increasing rates in premiums, which are eating into operating budgets and often mean that tenants eat that cost – whether it's through rent increases to the extent possible under subsidy stipulations or deferred maintenance.”
“And that is just an extension of this ongoing housing crisis for people who do not own property,” she added.
The situation also makes it more difficult to get affordable rental projects off the ground, according to the report.
“Operating budgets overly squeezed by costs like rising insurance rates can then lead the affordable housing industry — backed primarily by limited public resources — to produce even fewer units, which exacerbates the affordable housing supply crisis, prevents repairs and reinvestment in properties, and/or puts providers at risk of financial distress,” the report’s conclusion reads. “Tenants living in these units bear the brunt of these dynamics and are thus put further in harm’s way from rising property insurance costs.”
In the West, where wildfires are one of the principal drivers of insurance instability, Casey said rising premiums can also make it challenging for owners to retrofit rental properties with fire-safe improvements.
Some developers have turned to less common and regulated insurance alternatives, like surplus line policies and self-insurance entities like independent risk pools, which come with some advantages but may not lead to lower premiums. The report recommends that cities, states and the federal government explore government-run liability insurance programs, “particularly for affordable housing.”
This story was produced by the Mountain West News Bureau, a collaboration between Boise State Public Radio, Wyoming Public Media, Nevada Public Radio, KUNR in Nevada, KUNC in Northern Colorado, KANW in New Mexico, Colorado Public Radio and KJZZ in Arizona as well as NPR, with support from affiliate newsrooms across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting and Eric and Wendy Schmidt.
