The insurance landscape for apartment and rental properties is undergoing a rapid and significant shift. Major carriers are pulling back from habitational risks, leaving building owners facing cancellations, stricter underwriting, and substantial premium increases.
Liberty Mutual has announced its full exit from the state’s condo and rental market by 2026. In California, State Farm is canceling over 70,000 home and apartment policies. These developments are part of a broader trend, as insurers reassess their appetite for risk amid rising claims costs, natural catastrophes, and reinsurance pressures. Brokers who have long placed property and casualty insurance products in the admitted market are now confronting a stark new reality: familiar options are vanishing.
Brokers are increasingly turning to the Excess & Surplus (E&S) market as standard carriers scale back or exit the habitational space entirely. Success in this market requires a different approach: one that prioritizes strong submissions, thorough documentation, and a clear alignment between the risk and the carrier’s appetite. With focused preparation and a strategic process, securing commercial property and casualty insurance for distressed risks is still possible. Knowing when to pivot to the E&S market, how to meet underwriter expectations, and how to structure a winning submission has become essential as capacity tightens and underwriting scrutiny intensifies.
What Is Habitational Risk in Insurance?
Habitational risk refers to residential properties where tenants live but don’t own the building. This includes apartment complexes, condos, multi-family rentals, student housing, senior living facilities, and subsidized housing such as Section 8. These properties involve unrelated occupants, shared spaces, and third-party use, all of which contribute to a higher risk profile compared to owner-occupied homes.
Claims tend to be more frequent and complex. A leak in one unit can damage several. A stairwell fall can trigger liability. In higher-crime areas, incidents involving assault or firearms can make coverage nearly impossible to secure through standard markets. As loss trends rise, these accounts face more scrutiny and require more strategic placement.
Market Pressures in the Habitational Sector
The challenges in this space aren’t new, but they’re becoming harder to navigate. Capacity is shrinking as carriers respond to large losses, aging properties, and shifting appetite. Well-managed buildings that once qualified are now seeing exclusions, higher premiums, or non-renewals. The risks haven’t changed, but the tolerance for them has.
At the same time, demand for apartment rental housing continues to rise as new construction slows and more people are priced out of homeownership. That puts added pressure on property owners to keep units insured and more pressure on brokers to find coverage when the standard market won’t respond. That’s where the E&S market comes in.
When To Use the E&S Market for Habitational Risks
The E&S market is often the best option — and sometimes the only one — when a habitational risk falls outside standard appetite.
Older Properties and Outdated Systems
Aging plumbing, electrical, and roofing often fail to meet carrier standards, even when functional. E&S commercial insurance underwriters can be more flexible, especially when upgrades are documented.
High-Risk Liability Exposures
Risks involving assault, battery, firearms, or sexual abuse are often excluded. E&S markets may offer terms with appropriate sublimits.
Claims History and New Ownership
One prior claim on a property, or even a claim from another property owned by the same person or group, can lead to a decline in the standard market. E&S underwriters allow space to explain the loss and corrective action.
Severe Weather or High-Crime Areas
Properties exposed to wildfire, flood, or elevated crime may exceed standard market tolerance. E&S carriers are better positioned to evaluate these risks.
Vacancies and Renovations
Properties with vacant units or active remodeling are often excluded in the standard market. E&S carriers can work with these risks when proper controls are in place.
How To Strengthen Submissions for Difficult Risks
Underwriters in the E&S market work under tight timelines and limited capacity. They’re not necessarily looking for perfection, but they do need enough clarity and documentation to justify the risk. A strong submission tells a complete story. Here’s how to strengthen your submission and improve the chances of securing coverage in today’s E&S market.
Start With a Complete Application
Use the carrier’s preferred format, and fill it out thoroughly. Include a brief narrative outlining the building’s condition, occupancy, and any known upgrades. Attach recent photos, three to five years’ worth of loss runs with explanations, and available records of system updates like roofing, plumbing, and electrical.
If certain details are unknown, such as dates of upgrades made prior to the current ownership, describe the current state as accurately as possible. Structure and label documents and photos clearly so the file is easy to review.
Disclose and Contextualize Claims
If there’s been a claim, explain what happened and what’s changed. Provide detailed explanations and documentation of past losses, and describe the steps the ownership has taken to prevent recurrence. Well-documented action shows awareness and accountability.
Describe Safety, Maintenance, and Security Protocols
Explain how maintenance is handled, and note inspections or response procedures. List security features like fencing, lighting, cameras, and secure entry.
Clarify Tenant Mix and Screening
Indicate whether tenants are long term, short term, or subsidized. Explain lease terms, screening protocols, and who manages the property.
Highlight Ownership and Intent
Share who owns and manages the property. For newer owners, include relevant experience and future plans that signal stability.
Work With Someone Who Knows the Market
Strong submissions can still fail if sent to the wrong market. Partner with a wholesaler or MGA who actively places habitational risks.
Why Partner With Cochrane & Company?
Since opening our doors in 1960, we’ve carved out a niche as experts in placing tough habitational risks. We know what gets a submission approved, and we’ve built the kind of trust with carriers that gets difficult submissions across the finish line. If you’re struggling to place a hard-to-insure property, we’re here to help. Let’s talk through your risk and find the right solution. Contact us today to start the conversation.
About Cochrane & Company
For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.