Across the residential sector, particularly in multifamily, insurance dynamics are shifting.
Owners have spent years focused on property risk. But that’s no longer where the real pressure is coming from.
Even as property rates begin to stabilize and even decline in many markets, overall insurance costs aren’t easing the way many expected. Liability is now one of the most volatile and least understood drivers of cost, coverage and insurability.
If you still treat liability like a standard line item, you’re underwriting your own surprise.
The Claim Didn’t Change. The System Did.
For years, property exposures such as catastrophic events, rising replacement costs and valuation swings dominated insurance strategy. Liability coverage, by comparison, remained stable and predictable. Now, routine incidents often move quickly into litigation.
The issue isn’t just the number of claims. It’s how they evolve. Incidents that once resolved quickly are now moving into litigation faster and settling at higher costs.
Look around. Personal injury advertising is everywhere, and it works. When someone slips, trips, or falls, the first call often isn’t to the property management office. It’s to an attorney.
A slip on a stairwell. A trip on a sidewalk. A fall in the bathroom. Same incident. Higher stakes.
Why Liability Keeps Getting More Expensive
Several forces are reshaping liability, and most sit outside an owner’s control.
In many markets, juries have become more plaintiff-friendly. The settlement values are continuing to rise, and the threat of a nuclear verdict sits behind nearly every claim.
At the same time, litigation itself is evolving. In many cases, lawsuits are no longer just legal actions. They’re an investment strategy.
Third-party litigation funding firms now back personal injury and class-action claims, providing capital to pursue larger and more aggressive cases.
These firms aren’t participating out of principle. They’re seeking returns.
That shift changes incentives. It influences how long a case runs, how aggressively parties pursue it and how high the final number climbs.
Cases that might have settled quickly a decade ago can now stretch, escalate and land at a higher number.
Insurers price uncertainty. As uncertainty rises, premiums follow. Carriers also tighten terms and reduce capacity, especially for portfolios that can’t clearly demonstrate how they prevent claims and manage them when they occur.
The New Question Isn’t “What Happened?” It’s “Can You Prove Your Process?”
In this market, liability risk rarely comes down to the incident alone. It’s about defensibility.
When a claim hits, the spotlight swings to operations: what was done before the incident, what happened after and what can be documented.
- Were maintenance issues tracked?
- Were inspections consistent?
- Were hazards addressed quickly?
- Were protocols followed and proven?
Inconsistent processes don’t just create risk; they build leverage for the other side. Owners can’t control the legal environment, but they can control the story they present to a carrier, investor or jury.
Carriers now spend as much time underwriting how a property operates as they underwrite the property itself. Strong operations reduce incidents. They also materially improve outcomes when incidents occur.
What This Means for Cost, Coverage and Investor Confidence
The impact is showing up across residential portfolios. Liability pricing continues to rise even as property rates stabilize. Carriers are pushing for higher deductibles and tighter terms. In some cases, coverage is more limited or difficult to secure.
Underwriting has changed as well. Carriers are no longer evaluating risk based solely on the asset; they’re evaluating the operator. That shift is influencing acquisition underwriting, refinancing conversations and disposition strategy. Insurance is no longer a back-office decision. It’s part of the deal.
When insurance costs become less predictable, investors take notice. When coverage becomes harder to place, lenders do too.
A Needed Shift in Focus
The industry has become highly sophisticated in how it manages property risk, but it hasn’t fully caught up on liability. That needs to change.
Liability isn’t just an insurance product. It’s embedded in day-to-day operations, from inspections and maintenance to lighting, walkways, vendor oversight and incident response.
Owners who approach it strategically will be in a stronger position to control outcomes. Start by:
- Standardizing processes.
- Strengthening documentation.
- Addressing small issues before they escalate.
- Engaging early, not just at renewal.
The question isn’t whether an incident will happen, it’s whether you can defend it and how much that outcome will ultimately cost.
Jeremy Perlman
Vice President, Senior Risk Advisor
CBIZ
200 Princeton South Corporate Center
Ewing, NJ 08628
jeremy.perlman@CBIZ.com
