Fannie Mae & Freddie Mac Insurance Requirements: Market Rate vs. Student Housing

Securing agency financing through Fannie Mae or Freddie Mac is one of the most cost-effective ways for commercial real estate owners to finance multifamily assets. Both government-sponsored enterprises (GSEs) maintain detailed insurance standards that generally must be satisfied for loan closing, absent an approved exception or permitted alternative.

For insurance brokers, delivering an agency-compliant insurance package is critical to keeping a transaction on schedule. Whether your client is acquiring a standard market-rate apartment complex or a student housing property, identifying insurance compliance issues early can help prevent closing delays, last-minute coverage restructuring, deductible buybacks, or other unexpected costs.

Here is a broker field guide to navigating key Fannie Mae and Freddie Mac multifamily insurance requirements.

1. Property Insurance Requirements

Both agencies focus on protecting the value of the physical improvements and the property's income following a covered loss.

Coverage Area	General Fannie Mae & Freddie Mac Benchmark
Coverage Basis	Replacement Cost (RC) coverage with no coinsurance, or coinsurance effectively eliminated through an Agreed Amount provision. Actual Cash Value (ACV) may be permitted for roof coverings, subject to applicable agency requirements.
Minimum Limits	Single residential building: generally 100% of estimated Insurable Value. Multiple residential buildings: generally at least 90% of aggregate Insurable Value, subject to applicable valuation and policy requirements.
Covered Perils	Special Form / All-Risk property coverage. Ordinance or Law coverage is required for legally non-conforming properties, including Coverages A, B and C. Coverage D, Increased Period of Restoration, is also required in certain circumstances, including applicable buildings of five stories or more.
Business Income / Rental Value	Generally required for a 12-month period. Depending on the applicable agency requirements, limits may be established using Actual Loss Sustained (ALS), annual or annualized Effective Gross Income, or annual NOI plus continuing expenses. A 90-day Extended Period of Indemnity is also required for certain larger loans, including loans of $35 million or more.
Standard Property Deductibles	Standard maximum All-Risk deductibles generally include $50,000 for specific-limit policies where Insurable Value is below $10 million, $100,000 where Insurable Value is $10 million or greater, and up to $250,000 for qualifying blanket policies. Higher expanded deductibles may be permitted when applicable agency eligibility and financial requirements are satisfied.

Fannie Mae's current Multifamily Guide and Freddie Mac's Chapter 31 establish the controlling insurance requirements. Freddie Mac has also confirmed that the GSEs have worked to better align their multifamily insurance standards while providing borrowers greater flexibility in areas such as deductibles and aggregate arrangements. [1][2][3]

Broker Strategy Note: Wind, Hail & Named Storm

In wind-tier states and hail-prone markets, percentage deductibles are common and may be permitted under agency guidelines. Brokers should not assume that the standard $250,000 blanket deductible represents a universal maximum for catastrophe perils.

Wind, hail, and named-storm deductibles are subject to separate agency requirements that may permit percentage deductibles based on Total Insurable Value (TIV). The applicable limit can vary based on the peril, policy structure, property characteristics, and agency requirements. [1][2]

Broker takeaway: Evaluate catastrophe deductibles early. A percentage deductible that works from a carrier perspective can still create substantial borrower exposure and additional scrutiny during the lender's insurance review.

2. General Liability & Excess/Umbrella Scaling Rules

Both agencies generally require a primary Commercial General Liability (CGL) baseline of at least $1,000,000 per occurrence / $2,000,000 general aggregate.

Required Excess/Umbrella liability limits then scale based on the aggregate number of residential units insured under the applicable policy:

Total Residential Units Covered Under Policy	Required Excess / Umbrella Limit	Total Per-Occurrence Liability Limit
Up to 250 units	$1,000,000	$2,000,000
251–500 units	$2,000,000	$3,000,000
501–1,000 units	$3,000,000	$4,000,000
1,001–2,000 units	$5,000,000	$6,000,000
2,001–5,000 units	$10,000,000	$11,000,000
5,001–10,000 units	$15,000,000	$16,000,000
More than 10,000 units	$20,000,000	$21,000,000

For portfolio and blanket programs, the distinction is important. The umbrella requirement can be driven by the total residential unit count covered by the policy, rather than simply the number of units at the property being financed. [1][2]

Freddie Mac specifically identified its reduction of the maximum required umbrella/excess liability limit from $50 million to $20 million as one of its significant recent insurance updates. [3]

Liability Deductibles and SIRs

Brokers should also avoid assuming that CGL deductibles or Self-Insured Retentions are universally capped at $25,000 or $50,000.

Agency requirements permit higher deductibles in certain circumstances, particularly for blanket programs and qualifying expanded-deductible structures. The policy structure, number of properties insured, borrower financial capacity, and applicable agency provisions all need to be considered. [1][2]

3. Liability Exclusions Can Derail an Otherwise Compliant Placement

One of the most important parts of an agency insurance review is identifying restrictive liability endorsements before closing.

Agency requirements restrict liability exclusions involving claims related to:

• Assault & Battery

• Molestation

• Sexual Abuse

• Animal Attacks

• Firearms

  
  

These exclusions can create significant compliance issues. [1][2]

If the primary CGL or applicable excess policy contains one of these exclusions, the broker may need to remove the exclusion or otherwise secure compliant coverage. Depending on the program, that could involve an endorsement, separate coverage, alternative carrier placement, or restructuring of the liability tower.

For a broker working against a closing deadline, identifying those exposures at submission instead of after the lender's insurance consultant reviews the forms can make a meaningful difference.

4. Market-Rate vs. Student Housing: Same Insurance Review, Different Risk Dynamics

Student housing deserves particular attention.

Fannie Mae distinguishes between a Student Housing Property, where 40% or more but less than 80% of units are leased to undergraduate or graduate students, and a Dedicated Student Housing Property, where 80% or more of units are leased to students. Fannie also imposes specific underwriting requirements for dedicated student housing, including requirements related to campus size, proximity, operating history, and lease terms. [4][5]

Those financing distinctions do not create an entirely separate set of insurance rules, but the operating model can create very different insurance considerations.

A. Business Income & the Academic Calendar

Market-Rate Assets: Traditional apartment properties typically experience staggered lease expirations and renewals throughout the calendar year.

Student Housing: Student properties may operate around concentrated leasing, move-in and turnover periods tied to the academic calendar. A significant property loss shortly before the primary move-in period can therefore have a materially different revenue impact than a similar loss at a conventional apartment property.

Broker Impact: In addition to satisfying the applicable agency Business Income requirements, brokers should evaluate how the policy responds to the property's academic-year leasing cycle, including pre-leased revenue, summer turnover periods and the potential impact of a loss immediately before the primary move-in period.

B. Liability Hardening & Student Housing

Student housing can also create a challenging liability placement.

High tenant turnover, social activity, amenity usage, pools, fitness centers, security concerns, and other operational exposures can affect carrier appetite and policy terms.

Depending on the market and carrier, brokers may encounter exclusions involving:

• Assault & Battery

• Sexual Abuse or Molestation

• Firearms

• Animal Attacks

• Pools and other amenities

• Liquor-related exposures

  
  

Not every restriction automatically violates an agency requirement. But Assault & Battery, Sexual Abuse/Molestation, Firearms, and Animal Attack exclusions warrant particular attention because of the GSE liability requirements. [1][2]

5. Why Agency Compliance Starts at Submission

The worst time to discover an insurance compliance problem is days before closing.

A broker may have competitive pricing and adequate headline limits but still encounter issues because of:

• An unacceptable liability exclusion

• An insufficient umbrella limit

• An incorrect Business Income structure

• A catastrophe deductible issue

• Coinsurance

• Inadequate Ordinance or Law coverage

• Blanket policy limitations

• An insurance structure that does not adequately account for student housing operations

  
  

The earlier those issues are identified, the more options the broker has to address them.

6. The Broker's Agency Pre-Closing Checklist

Before presenting an insurance package for an agency-financed multifamily or student housing property, confirm:

• Property coverage is written on the required Replacement Cost basis.

• Property limits satisfy the applicable Insurable Value requirements.

• Coinsurance is removed or appropriately addressed through an Agreed Amount provision.

• Business Income/Rental Value satisfies the applicable agency requirement.

• Any required Extended Period of Indemnity is included.

• Ordinance or Law coverage is included when required, including Coverage D where applicable.

• Wind, hail, named-storm, flood, and earthquake deductibles have been evaluated separately from the standard All-Risk deductible.

• CGL provides the required primary limits.

• Excess/Umbrella limits correspond to the aggregate residential unit count covered by the policy.

• Liability deductibles and SIRs comply with applicable agency requirements.

• Liability forms have been reviewed for Assault & Battery, Sexual Abuse/Molestation, Firearms, and Animal Attack exclusions.

• Blanket policies have been evaluated for limits, deductibles, aggregates, and other agency-specific requirements.

• Student housing-specific operating exposures have been considered where applicable.

• Potential exceptions or non-compliant provisions have been identified early enough for lender review.

  
  

The Bottom Line for Brokers

Insurance compliance is about more than checking limits on a certificate.

For Fannie Mae and Freddie Mac transactions, brokers need to evaluate valuation methodology, property limits, deductibles, catastrophe coverage, Business Income, liability exclusions, umbrella scaling, and the structure of blanket insurance programs.

Student housing adds another layer because its operating model can create insurance exposures that differ materially from conventional multifamily, even when the underlying agency insurance standards are similar.

For brokers navigating those risks, HabGen provides purpose-built Property and General Liability solutions focused exclusively on student housing and multifamily properties. 

Our underwriting is grounded in the realities of habitational ownership and operations, helping brokers approach complex risks with a market that understands the asset class. [6][7][8]

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Disclaimer: This article is provided for general informational purposes only and is not a substitute for the applicable Fannie Mae or Freddie Mac requirements, loan documents, insurance policy terms, or professional advice. Agency requirements are subject to change and may vary based on loan structure, property characteristics, policy structure, and lender or Seller/Servicer review. Insurance coverage is subject to applicable policy terms, conditions, limitations, and exclusions.

Sources

[1] Fannie Mae Multifamily Selling and Servicing Guide, Property and Liability Insurance.Current Fannie Mae requirements governing property coverage, Insurable Value, deductibles, Business Income/Rental Value, Ordinance or Law, liability insurance, umbrella/excess coverage, and related insurance standards.https://mfguide.fanniemae.com/

[2] Freddie Mac Multifamily Seller/Servicer Guide, Chapter 31: Insurance Requirements.Primary Freddie Mac source governing property, Business Income, catastrophe, liability, deductible, and excess/umbrella requirements.https://mf.freddiemac.com/docs/chapters/mf_guide_ch_31.pdf

[3] Freddie Mac, "Updating and Aligning Multifamily Insurance Requirements," July 7, 2026.Overview of recent GSE insurance alignment, including deductible flexibility, aggregate arrangements, and reduction of the maximum umbrella/excess requirement from $50 million to $20 million.https://mf.freddiemac.com/viewpoints/paul-wooldridge/20260707-updating-and-aligning-multifamily-insurance-requirements

[4] Fannie Mae Multifamily Guide, Student Housing Properties.Defines Student Housing Property and Dedicated Student Housing Property and provides applicable underwriting considerations.https://mfguide.fanniemae.com/node/3051

[5] Fannie Mae Multifamily Guide, Dedicated Student Housing Property.Provides eligibility requirements addressing campus size, proximity, operating history, and other characteristics of Dedicated Student Housing Properties.https://mfguide.fanniemae.com/node/3126