Real Estate Insurance: Master Insurance Program vs. Bifurcated

Construction & Real Estate, Property & Casualty

For many real estate companies and investors, insurance is viewed as a necessary evil that is an often overlooked cost of doing business. That’s understandable, very few people want to deal with insurance unless they have to.

However, if you haven’t carefully considered your insurance program as part of your company’s overall financial and risk management strategy, you may be putting your company at risk unnecessarily and leaving significant dollars on the table.

This is true now more than ever as catastrophic property losses are on the rise nationwide and market challenges abound. Unfortunately, repetitive weather patterns and increased catastrophic incidents are causing the insurance industry to pass added costs on to property owners.

Given these concerning statistics and trends, if you haven’t considered your insurance and risk management strategies lately, it may be time to take a fresh look.

Master Insurance Program vs. Bifurcated Program

The two most common programs for real estate companies and investors are the master insurance program and a bifurcated program.

In a bifurcated program, the company or investor relies on independent insurance programs for each of its properties and operations—each with its own policies, renewal dates, carrier or broker partners, etc.

On the other hand, a master insurance program “rolls-up” all of the company or investor’s properties and operations under a single consolidated program. While there is never a one-size-fits-all approach, a master insurance program typically offers significant benefits for real estate companies and investors over a bifurcated approach. These benefits include:

  • Decreased Administrative Burden. A master insurance program significantly decreases the administrative burden of the insurance marketing and renewal process by having a one renewal date, one broker, and fewer insurance carriers. Because all of the properties and operations are under one program, coverage terms will be standardized between all locations and operations, resulting in a better, more comprehensive insurance program.
  • Broader Coverage Terms and Limits. There is more leverage to negotiate enhanced coverage terms and broader limits in a master insurance program. For example, a master program would be structured with a “blanket” limit of property insurance or a “loss limit” that is adequate to cover the largest possible loss in any one occurrence.
  • Economies of Scale. Combining all properties and operations under one program creates economies of scale savings that cannot be achieved by procuring insurance on a bifurcated basis, often resulting in significant overall premium reductions.
  • Stronger Relationships. A master insurance program will place more insurance premium with fewer insurance carriers. This will result in stronger carrier relationships, leading to more favorable underwriting and claims leverage.

If you haven’t considered whether you could benefit from a master insurance program, weigh your options and work with a trusted insurance advisor who can help you determine which program is best for you. No matter which program you choose, prioritizing your insurance and risk management strategies will provide you with peace of mind, as well as more time and money to focus on your business.


This blog post is derived from an article by Brendan Bush originally published on the Marquette University Real Estate Blog. Read the full article here.

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