Crocker notes that even though premiums have increased 50% on the REIT's properties, for coverage that includes $500,000 deductibles, the insurance adds up to about 2% of the portfolio's total operating expenses. However, the cost of coverage has increased so much on some properties that it has severely sliced into net operating income, thus reducing the value of the property unless capitalization rates go down even further from their already historic lows.

In Florida, Crocker told The Gerald Fogelson Forum on Real Estate here, insurance costs were less than $70 per unit before Sept. 11. After the terrorist attacks on the US, the costs nationwide have risen to $85 per unit. In Florida, however, renewals are coming in at $400 per unit, he says.

At Equity Office Properties Trust, not even the largest office REIT in the US is immune from a doubling of insurance costs. "We've seen a 100% increase in pricing with many of the perils you'd normally need right now being excluded," Helfand says. "So you're paying twice as much right now for less coverage."