The cost to insure apartments, rose slightly in 2011, the first time in four years, according to the National Multi Housing Council’s annual Apartment Cost of Risk Survey (ACORS).
The survey, which is based on data covering 750,000 units operated by 57 apartment firms, shows the average (nonweighted) Total Cost of Risk (TCR) rising 1 percent between 2010 and 2011.
By comparison, last year’s report shows a 6 percent decline in the TCR. (Total Cost of Risk reflects the cost of the three principal components of insurance premiums: property, general liability and workers’ compensation.) A 25 percent increase in workers’ compensation rates was one of the main factors behind 2011’s higher TCR, although higher premiums were also recorded for general liability coverage.
“Although this year’s increases were small and limited to a couple of lines of insurance, we expect to see moderate price increases in 2012 as a result of both the current investment market and the impact of severe weather in 2011,” said Jeanne McGlynn Delgado, NMHC’s Vice President of Business and Risk Management Policy. Key findings of NMHC’s ACORS survey:
• The mean average property cost of risk, which accounts for 70 percent of the average apartment firm’s insurance budget, decreased by 1 percent in 2011.
• The mean average commercial general liability cost of risk increased by 9 percent, from $37 per insured unit in 2010 to $40 in 2011.
• Premiums for workers’ compensation increased from $833 per full-time employee in 2010 to $1,040.
• 62 percent of apartment firms require residents to have renters’ insurance with the most common limit required at $100,000.
Visit www.nmhc.org for details.