California Multifamily Insurance: What Property Owners Need to Know (2025 Update)

The cost of insurance for multifamily properties in California has been rising sharply—and many property owners are starting to feel the impact. If you're a landlord or investor, here’s a quick overview of what’s happening, why it matters, and how you can respond.

Why Are Insurance Rates Going Up?
Due to the increasing risk of wildfires and natural disasters, major insurance companies are raising rates—or even pulling out of California altogether.

For example:

* State Farm raised premiums up to 38% for multifamily owners starting June 2025.
* Some major insurers like Hartford, Travelers, and Nationwide are no longer renewing policies in California.

What Can You Do to Lower Your Insurance Costs?
While you can’t stop rates from going up, here are 4 smart ways to reduce your insurance expenses:

1. Raise Your Deductible
A higher deductible often means lower monthly premiums—but be sure to review this with your lender first.

2. Make Safety Upgrades
Installing fire suppression systems, security features, or replacing an old roof can lower your risk—and your premium.

3. Bundle Your Policies
If you own multiple rental properties, ask your provider about bundling discounts.

4. Transfer Risk
Require renters to carry their own insurance, and use service contracts that shift liability to your vendors.

How Much Does Insurance Cost in California?
As of early 2025, here’s the average quarterly insurance cost per unit in California’s major cities:

San Francisco – $312
Los Angeles – $244
Orange County – $272
San Diego – $261
Sacramento – $144 (lowest)

Note: These numbers can fluctuate depending on building age, condition, and location.

Insurance Trends Outside of California
California isn't alone. Insurance costs as a percentage of NOI (Net Operating Income) are even higher in Florida and parts of the Midwest, where hurricane and storm risks are driving premiums up as high as 6–7% of NOI.

New Construction and Demand Outlook
Despite the insurance challenges, demand for apartments in California remains strong:

* Nearly 49,000 units were absorbed statewide in the last year.
* Vacancy rates are dropping across most major cities.
* About 30,000 new units are expected to be completed again this year.

However, permitting for new multifamily projects is slowing down—meaning less new supply may come online after 2025.

Final Thoughts
Multifamily insurance in California is getting more expensive—and more complicated. But with smart planning, you can still protect your property, control your costs, and stay ahead of the market.

Need help navigating your insurance options or reviewing your property's risk profile? Earth Real Estate is here to support you with expert advice, proactive management, and local market knowledge.