Insuring Older vs. Modern Assets: Insurance Coverage Strategies

Managing a multifamily portfolio means juggling properties of all ages and conditions. Commercial property risk management looks very different for a decades-old complex versus a newly constructed building. In fact, the Federal Reserve reports that property insurance costs rose more than 75% between 2019 and 2024. Insuring older vs. modern assets is a key driver of that increase, and getting it wrong can be costly.

Why Your Insurance Agency Looks at Asset Age First

Working with a knowledgeable commercial property insurance broker is the smartest first move you can make. The age of your building directly shapes how insurance companies assess risk, calculate your premium, and define your coverage options. 

An older property with aging infrastructure is simply not evaluated the same way as a newly built unit with modern systems. Knowing this upfront helps you set realistic expectations and advocate for the right insurance coverage across your entire portfolio.

Why Older Multifamily Assets Drive Up Your Insurance Costs

Older buildings may carry higher risks that insurers flag immediately before offering any policy. Here is what they look at most closely:

• Outdated electrical and wiring. Knob-and-tube or aluminum wiring dramatically raises fire risk. Many insurance companies will refuse coverage or spike your insurance premium if outdated electrical systems remain untouched.

• Aging plumbing systems. Galvanized pipes and older plumbing systems are prone to leaks and failures. An insurer may require updated plumb work before agreeing to insure the property at all.

• Roof age and condition. A roof past its 20-year mark is a serious red flag. Proactively replacing it before renewal can meaningfully reduce your insurance costs and prevent claim disputes.

• Building codes gaps. Older properties rarely meet current building codes. If a covered loss occurs, you could be required to rebuild the entire structure to modern standards, adding enormous out-of-pocket expenses.

• Ordinance or law coverage. This add-on is critical for older buildings. Standard insurance policies typically exclude code upgrade costs after a covered loss from natural disasters. Without it, you absorb that expensive gap yourself.

What Makes New Properties Simpler and Cheaper to Insure

New multifamily assets come with real advantages when it comes to insurance coverage. Modern construction uses updated wiring, code-compliant plumbing systems, and materials that are easier and cheaper to replace. Insurers see new builds as lower-risk, and that typically means a lower insurance premium from the start. That said, do not assume “new” means “fully protected.”

Replacement cost values need to reflect today's actual construction costs, which have risen sharply in recent years. Work with your insurance agency to make sure your policy keeps pace with current rebuild expenses.

Smart Coverage Strategies for Mixed Portfolios

If your portfolio includes both older and newer assets, a one-size-fits-all policy will not cut it. Here is how to protect every property properly:

• Audit insurance policies annually and update replacement cost values across all units

• Add ordinance or law coverage to every older unit in your portfolio

• Prioritize upgrades to outdated electrical, plumbing systems, and roofing to lower premiums

• Ask your insurance agency about premium credits for recent renovations or safety upgrades

• Compare coverage options from multiple insurance companies before each renewal cycle

• Consider bundling auto insurance or other policies with the same insurer for cost savings

• Confirm that your insurance coverage reflects the actual number of rentable units per building

The Bottom Line on Protecting Your Portfolio

Insuring older vs. modern assets requires a completely different mindset for multifamily owners. Older properties carry hidden risks tied to outdated electrical, aging plumbing systems, and building codes gaps that newer builds simply do not have. Addressing these issues not only reduces your premium but can also increase property value over time.

The right insurance coverage, tailored to each property's age and condition, is what keeps your portfolio protected and your insurance costs under control long term.