As any property & casualty insurance broker can tell you these days, commercial insurance rates are on the rise, with double-digit increases not uncommon.  A number of factors are contributing to growing premiums for insureds, among which are the following:  costly repairs from recent natural disasters, the increasing frequency and severity of auto claims due to distracted driving, economic uncertainty surrounding the Covid-19 pandemic, and nuclear jury verdicts where the awarded damages are multiples of what they used to average even a few years ago.

Unfortunately the multifamily industry has not avoided these rising insurance costs.  Like all real-estate-centric companies, multifamily property coverage costs more today than it did even a year ago, particularly for those with a portfolio heavily exposed to wind, flood, and earthquake risks.  On the casualty side, rate hikes for general liability and umbrella liability (which sits over general liability and auto liability policies, providing higher limits of coverage) are also a reality facing multifamily businesses.  But there’s one facet of general liability insurance that is affecting the multifamily (and other habitational markets) in an unexpected way:  coverage for assault and battery. 

Let me take you back to October of 2019.  At that time one of my clients, a large multifamily development and property management company, had advised that they’d just sign a contract to manage a third-party apartment complex.  We informed the client’s general liability carrier, Philadelphia Insurance Company, so that they could endorse the client’s policy to add the location, as we had done for all of the prior locations that this client managed. 

Philadelphia’s response shocked me and my account team:  We’re not going to cover this location.  When we asked them why, Philadelphia informed us that they’d suffered a dramatic increase in the frequency and severity of sexual assault and armed robbery claims.  To help them combat this, they started running crime scores on all locations using RiskMeter by CoreLogic.  This subscription service allows you to input any address and receive a report that details an overall crime risk score, as well as additional scores broken down by each type of crime (including homicide, robbery, and rape), using current and historical reported crime information.  The first page of the report provides a Google Maps overview of the crime score information based on the searched address:

The second page of the RiskMeter score report provides the crime report details:

Our Philadelphia contact advised at that time that any location with a homicide score higher than 80.0 would be banned from coverage.  The location that we’d submitted to them was higher than 80.0 and was thus declined.  We were angry, feeling like the carrier was changing their underwriting practices in the middle of the policy term.  After much back and forth, we finally got them to agree to add the coverage for this higher-crime location with a deductible of $250,000, much higher than the $25,000 deductible for the other locations.  The same policy was applied to other “high-crime” locations throughout that policy term.

As the renewal approached, Philadelphia made it clear that such a policy would continue, and we knew that we’d have to market and replace the general liability coverage.  The question was:  Which carriers would be a fit?

We marketed far and wide, chasing down every possible insurer and program that seemed a potential home for habitational liability coverage.  Several markets mentioned that they had started running crime scores as well and using that information as part of their underwriting evaluation process.  After many phone discussions and much effort, we finally bound the coverage with Berkley Aspire, a W.R. Berkley company that didn’t have an issue with the crime scores, focusing instead of the individual claim history of our insured, which was positive.

So while we eventually found a carrier to partner with and everything ended well (for now), I’ll never forget how blind-sided I felt when I got that email from Philadelphia, telling us that crime scores from providers like CoreLogic had changed the general liability insurance landscape at that point and moving forward.  My hope is having read this, you won’t have to endure the same uncomfortable feeling.