August 3, 2022

JF2892: Top 3 Factors Impacting Insurance Right Now ft. Micah Mattox


Micah Mattox is the director of both commercial insurance and multifamily at RealProtect, a real estate brokerage operating nationwide. RealProtect helps real estate investors manage their risk and protect their assets using specialized programs designed to fit their needs. 

In this episode, Micah shares the top three factors that are having the biggest impact on multifamily insurance rates right now and what investors can do to adapt.

 

1. Rising Cost of Construction

Micah says the rising cost of construction is currently having the highest impact on multifamily insurance. If an investor owns a $1M property and there is a 20% rise in construction costs, for example, the investor won’t see an increase in coverage until it’s time to renew. If something happens to the building before renewal, however, they won’t have enough coverage to replace the building at that 20% higher cost. 

“Construction costs go up and down and there are not a lot of automatic things in a policy that would help with that,” Micah explains. He encourages investors to monitor construction costs in their own MSAs and reach out to incorporate incremental changes into their insurance policy accordingly instead of waiting until it’s time to renew. 

 

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2. Crime

Many metros have seen a rise in crime since the pandemic, which is the second biggest factor affecting multifamily insurance rates, Micah says. When it comes to multifamily policies, it can be difficult to obtain coverage for things like assault and battery, firearms exclusion, or sexual abuse coverage from some carriers. However, certain insurance carriers are offering standalone, supplementary products as a solution. 

Micah says that crime rates are cyclical, and we are simply at a high point in the cycle at the moment — he speculates that they will go back down. “If starting today, we start to see that drop in crime and things start to improve, [multifamily insurance is] going to take a little bit of time to catch up just due to the nature of the product,” he explains. 

 

3. Climate Change

The third biggest factor impacting multifamily insurance rates, Micah says, is climate change. For example, recent changes in weather patterns have caused Atlanta to be newly deemed a major wind and hail zone, which is driving up the price of coverage in the market. 

“The biggest thing that people will see on their policies typically other than maybe some premium change is the wind and hail deductibles,” he says. “It used to be really common to just have one deductible, whereas we’re now seeing a separate wind/hail deductible.” This can range anywhere from 1%–5% depending on the size and value of the property.

 

Micah Mattox | Real Estate Background

  • Director of Commercial Insurance and Director of Multifamily at RealProtect. They help real estate investors and all those involved with the real estate industry manage their risk and protect their assets using specialized programs designed to fit their needs.
  • Based in: Atlanta, GA (operates nationwide)
  • Say hi to him at:
  • Greatest lesson: The importance of networking and community. The real estate industry is so tight-knit that if you are excellent at your job and treat people right, they will tell their friends. The opposite is also true, which is why I always go the extra mile to help wherever I can.

 

 

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