Sweeping New Agency Standards
Multifamily property owners across the country are grappling with major changes this year as Freddie Mac and Fannie Mae rolled out tight new insurance requirements for 2025. These updates have triggered uncertainty, higher costs, and often unexpected snags in property transactions and refinances.
The July 2025 Guide Bulletins from both agencies introduced sweeping changes to what coverage is needed. Freddie Mac, for example, now requires broader liability insurance, eliminating exclusions for assault & battery, firearms, animal attacks, abuse & molestation. Fannie Mae implemented similar guidelines, with an escrow requirement of $250,000 for borrowers who cannot secure compliant coverage, a change making waves among lenders and borrowers alike. These mandates do not just affect new deals. Insurance policy renewals for existing loans are subject to these standards after September 15, 2025.
Spiraling Costs and Shrinking Options
Owners are reporting painful premium hikes just to keep their properties compliant. Some have seen costs climb by 20 percent and in some states, up to 100 percent, as insurance carriers recalibrate risk and redefine what they will cover. For many, especially smaller owners and those in high-claim states like California, Florida, or New York, the process is not only expensive but sometimes nearly impossible. General liability policies with broad coverage are rarely available in the admitted market, and specialty alternatives tend to come with higher deductibles, limited protection, or conflicting carrier interests.
More Than Liability: Flood and Storm Requirements
It is not just liability insurance that has been toughened up. Both Freddie Mac and Fannie Mae now require enhanced flood insurance, enough to cover the entire loss of the first two floors of a building in a special flood hazard area. Wind, hail, and “named storm” coverage all have more exacting standards as well, adding to the scramble to find carriers willing to write compliant policies.
Practical Realities and Industry Solutions
From the broker’s desk, here is what the market looks like in practice: The new requirements demand $1M limits for Assault and Battery, Animals, Firearms, Abuse and Molestation. Few carriers can provide all four together. Mainstream options like Travelers and AmTrust generally restrict coverage to new construction. As a result, most properties move to the Excess and Surplus lines market for quotes, where only a few players can structure all four coverages. Minimum premiums often start at $25,000 and full limits may not be available, with $250,000 sublimits permitted via a waiver process. These waivers get varying results depending on loan originators and account specifics.
Broker strategies to navigate the chaos include steering loans away from Freddie and Fannie for properties under 100 units, building master GL policies across multiple properties to achieve better rates and more favorable terms, and, when no other solution fits, purchasing separate and costly Assault and Battery policies. Owners are further cautioned to avoid acquiring properties in high-crime areas as flagged by risk analytics tools like RiskMeter or Zesty, since insurance compliance will become even harder.
Disruption Extends to Existing Loans
These strict standards are being applied retroactively, meaning that even loans previously in compliance must find new coverage at renewal. This is forcing owners to hunt for new carriers and sometimes escrow large upfront insurance reserves just to keep loans performing. Deals are stalling or dying at closing as coverage gets scrutinized.
What Should Multifamily Owners Do Next?
Work with your insurance broker or risk advisor well before any renewal or acquisition. Review every existing policy for gaps or non-compliant exclusions. If you are in an agency program, prepare for extra escrow and documentation requirements. Budget for higher premiums and additional compliance tasks as part of regular property management.
The consensus from news sources, industry executives, and broker experience is unanimous: these insurance mandates are becoming the new normal for agency-financed deals. If weather events, legal claims, and insurer pullbacks continue at present rates, expect other lenders to follow Freddie and Fannie’s lead, making preparation and proactive advice essential in 2025 and beyond.