Coverage requirements
Freddie Mac
Last updated August 2026 · Maintained and reviewed by the Advocate Insurance Consultants coverage research team.
Overview
What an adequately protected Freddie Mac program looks like
The complete set of insurance requirements established by Freddie Mac for multifamily and commercial real estate lending, covering all seven eligible asset types in a single profile. Use this to validate coverage on an active Freddie Mac deal or to benchmark an existing program against full agency standards.
Key takeaways
- Spans 2,395 published requirements across 60 coverage type-peril pairs.
- Applies to 7 asset types: Assisted Living, Cooperative Corporation, Independent Living, Mixed Use, Mobile Home Park, Multi Family, Student Housing.
- Covers 12 coverage types and 16 distinct perils.
At a glance
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Completion score
21 of 60 WIM pairs required
Coverage tower
Required limits by coverage type and peril
Requirements
Full requirement set for Freddie Mac
Every requirement in the Advocate standard, 2,395 rows across limits, deductibles, carrier rating, and presence checks. Search and filter to drill in.
Showing 50 of 2,395 matching · 2,395 total
Compliance
Who requires Freddie Mac
- Freddie Mac's Multifamily Seller/Servicer Guide sets the insurance conditions that Optigo lenders and seller/servicers must confirm before a loan closes and throughout servicing.
- Compliance is shared across the deal: borrowers and sponsors procure and maintain the coverage, master and primary servicers monitor renewals and evidence, and insurance brokers placing agency multifamily business structure programs to match the Guide.
- Carriers must meet Freddie Mac's financial-strength thresholds.
- Because acceptable evidence of insurance is a condition of loan closing and of ongoing servicing, a shortfall against these standards can delay funding, trigger a servicing exception, or place a borrower in technical default.
- The requirements apply uniformly across multifamily, cooperative, assisted living, independent living, mixed use, mobile home park, and student housing assets.
Carrier standard. Carrier must have an AM Best Rating that meets the required Letter and Financial Size ratings.
Advocate runs these checks automatically for the brokers who place habitational coverage.
Exclusions
What Freddie Mac does not cover
- Freddie Mac's Guide focuses on property, business income, and core liability.
- Several lines commonly needed by a habitational operator fall outside the mandated set and remain the borrower's responsibility to evaluate separately: Omission from the agency requirement set is not a statement that the exposure is absent.
- These are real gaps a borrower may still need to fill based on operations, staffing, and site conditions.
Risk advisory
Typical coverage gaps in Habitational
Most declinations trace to a handful of recurring shortfalls.
- Confirm the property program is written on a replacement cost basis rather than actual cash value, and that an agreed value or coinsurance waiver removes any coinsurance penalty.
- Business income or rental value should carry an adequate 12 to 18 month indemnity or extended period so debt service is protected during a long rebuild.
- For catastrophe exposure, verify flood coverage for any improvements in a Special Flood Hazard Area, with NFIP plus excess where limits fall short, and check that named storm and wind or hail deductibles stay within the Guide's percentage caps.
- Confirm ordinance or law (Coverage A, B, and C) for older or non-conforming buildings, boiler and machinery where centralized equipment exists, and a documented terrorism election under TRIPRA.
- Finally, validate that mortgagee, loss payee, and lender endorsements name Freddie Mac and the servicer correctly.
FAQ
Frequently asked questions
What insurance does Freddie Mac require for multifamily properties?
Freddie Mac requires replacement-cost property coverage, business income or rental value insurance, ordinance or law, and commercial general liability. Catastrophe perils such as flood, named storm, wind or hail, earthquake, boiler and machinery, and terrorism are required where the property's location or systems create the exposure, along with lender-specific mortgagee and loss-payee endorsements.
Does Freddie Mac require flood insurance on multifamily loans?
Yes. Freddie Mac requires flood insurance for insurable improvements located in a FEMA Special Flood Hazard Area, meeting at least the federal mandatory purchase amount through the NFIP, with excess flood added where NFIP limits are insufficient. Coverage must be maintained until FEMA issues a formal map amendment or revision removing the property.
What is Freddie Mac's named storm and wind deductible cap?
Freddie Mac caps catastrophe deductibles for named storm and wind or hail as a percentage of insurable value, commonly limited to a defined maximum. Deductibles above the Guide's threshold require additional review or a deductible buy-down, so brokers should confirm the current percentage before binding coastal or high-wind risks.
When does Freddie Mac require earthquake insurance?
Freddie Mac requires earthquake coverage when a seismic study places the property in a higher-risk zone and the probable maximum loss exceeds the Guide's threshold, typically around 20 percent. Below that level, a probable maximum loss report can support a waiver, but the analysis must be documented in the loan file.
How much business income coverage does Freddie Mac require?
Freddie Mac requires business income or rental value insurance sufficient to cover lost rents during restoration, generally structured for a 12 to 18 month indemnity period with an extended period of indemnity. The limit should reflect gross rents and continuing expenses so debt service is preserved through a full rebuild after a covered loss.
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