How State-Level Junk Fee Laws Affect Ancillary Insurance Income in Multifamily

The FTC's federal rule making process moves slowly. State legislatures do not. By the time a final federal rule on rental housing fees reaches operators, a significant portion of the U.S. multifamily stock will already be subject to state and local fee transparency requirements that are in many cases more stringent than what the federal rule is likely to require.

Understanding the current state-level landscape (and its specific implications for resident insurance programs) is not optional for operators with multi-state portfolios.

The current state law landscape

Colorado: effective January 1, 2026

Colorado enacted one of the most comprehensive junk fees frameworks in the country, requiring all rental ads to display a true total price that includes all mandatory fees as a single number. The total price must be more prominent than any other pricing information in the advertisement. Fees that cannot be determined at the time of advertisement (those that depend on tenant selections) do not need to be included in the total price.

The Colorado law is broad (it applies across industries, not just rental housing) but it has specific implications for multifamily operators with Colorado properties. Any mandatory monthly charge, including resident insurance programs, must be included in the advertised total monthly cost if it is required as a condition of tenancy.

Connecticut: effective July 1, 2026

Connecticut's new transparency statute requires the total price, inclusive of all required charges, to be disclosed in advertising. Optional add-on services can be excluded from the displayed total, but only if the landlord provides clear notice and reveals costs before any agreement is signed.

Massachusetts: effective September 2025

Massachusetts strengthened consumer pricing rules requiring businesses, including landlords, to present total pricing and fully disclose the nature, purpose, and amount of any included fees in rental advertising. The Massachusetts rule generally requires providing the total price before collecting the consumer's personal information.

California: SB 478, the Honest Pricing Law

California's Honest Pricing Law requires transparent disclosure of total prices for most consumer transactions. While it contains specific provisions for certain industries, its broad applicability to rental housing has been actively litigated and is being closely watched by operators with California portfolios.

States with pending or advancing legislation

As of early 2026, state legislators in New York, Illinois, Washington, Oregon, and several other high-rental-market states have introduced or are advancing fee transparency legislation. The trend is clear and accelerating.

The specific impact on resident insurance programs

The critical question for each state law: does the resident insurance program charge constitute a mandatory fee that must be included in the advertised rent?

The answer depends on whether the program is structured as a mandatory charge or as an enrollable service with a documented opt-out path. In Colorado, Connecticut, and Massachusetts, charges that are truly optional (where residents can opt out by providing their own qualifying coverage) may be excludable from the total price displayed in advertising, provided the opt-out is clearly documented and accessible.

This makes the structural distinction between a mandatory fee and an optional insurance program with a clear opt-out pathway critically important for compliance in these states. A program structured with a genuine, documented opt-out is not a mandatory fee. A program with a nominal opt-out path that is not accessible or enforced is functionally mandatory and therefore likely covered by the disclosure requirement.

The compliance priority list for multi-state operators

For operators with properties in multiple states, the compliance priority hierarchy is:

• Immediately: audit properties in Colorado for January 2026 compliance. All mandatory charges must be in advertised pricing now

• By July 2026: Connecticut properties must reflect total pricing inclusive of mandatory charges in all advertising

• Ongoing: track California enforcement developments and prepare for potential reclassification of currently-optional charges

• Within 12 months: review all multi-state advertising and listing materials for total price compliance across the most restrictive applicable state law

The captive program compliance advantage

Captive-structured resident insurance programs have a specific compliance advantage in the state law environment: because they are administered by licensed insurance carriers regulated by state insurance departments, they fall within a separate regulatory framework that predates and coexists with fee transparency laws. The charge is premium for insurance coverage, a product regulated and defined by state insurance law, not an ancillary service fee.

This does not mean captive insurance programs are entirely exempt from transparency requirements in every state. But it does mean they have a clearer legal framework, more defined product characteristics, and stronger documentation than unstructured ancillary fees. All of which reduces regulatory exposure and strengthens the compliance position.