What Rising Insurance Costs Mean for Healthcare Real Estate Deals

We talk a lot about interest rates, construction costs, and tenant strength—but lately, one factor is quietly eating into margins across the board: insurance premiums.

In 2025, healthcare properties—especially those in coastal markets or areas with high natural disaster risk—are seeing a sharp increase in insurance costs. Operators and owners are feeling it. So are lenders. And it’s beginning to affect how deals are underwritten, especially for behavioral health and senior-focused facilities.

Unlike a retail strip center or industrial warehouse, healthcare facilities carry higher liability exposure. You’re dealing with patient care, specialized equipment, on-site pharmaceuticals, and in some cases, residential treatment. That means more coverage is needed—and more expense.

For valuations, that matters. A facility with a $200K annual insurance bill now paying $350K is seeing real NOI erosion. It can also influence cap rate expectations, lease negotiations, and the buyer pool willing to take on the risk.

So what do you do? You factor it in early. When we look at a facility’s value, especially in today’s environment, we’re digging deep into operating costs—and insurance is right at the top of that list. Surprises at the eleventh hour are a deal killer.

Whether you’re buying, selling, or refinancing, now’s the time to stress-test your numbers and get ahead of rising premiums. It’s not just about the coverage—it’s about protecting your margins and your upside.

📅 Book a call if you’re reviewing a deal or want to make sure your valuation reflects the full picture.

📬 Subscribe to the newsletter for monthly breakdowns of what’s moving the needle in healthcare real estate.