Insurance is getting harder to find and more expensive in most of the country. Just ask home owner associations.
Mirroring trends in the family market, insurers are raising premiums or going out of business entirely covering Hoas’ shared assets, citing growing losses from extreme weather and older buildings. Steep premium trips are usually passed on to individual owners in the form of a higher monthly fee.
For many insurers, HOA coverage is a relatively niche product, but the 74 million Americans who live in these communities rely on what’s known as a master policy to insure common assets like sidewalks, playgrounds and, in the case of multi-family buildings, roofs and certain interior and exterior features.
These higher insurance costs are another cost that makes home ownership a challenge for a growing number of Americans. They’re also increasingly inevitable: in many parts of the country, HOAs make up a growing portion of the local housing stock.
“All the catastrophes and catastrophes have contributed to rising premiums,” said Dawn Bauman, executive director of the Community Association Research Foundation. “It’s not just condominium associations or community associations — it’s every part of the insurance market.”
Surf Squad 2021 Florida The condo collapse was a turning point that made coverage difficult, especially for condo associations, Bauman said. Insurance issues have also affected HOAs that make up single-family homes, but they are most profound in apartment, house and townhouse communities because these developments have more communal features.
Thousands of miles from Florida, in suburban Minneapolis, insurance broker Eric Skarnenes is having increasing trouble finding opportunities for his clients in Minnesota and Colorado. In both countries, insurers are afraid of damage hails, which can crack roofs.
“The days of having two, three or four options are long gone,” said Skarnes, whose company, Insurance, insures about 500 HOAs. “Most associations are only lucky to be renewed.”
Mark Foster sits on the board for the 84-unit complex in Lakeville, Minn. As of 2021, the premiums on his primary HOA insurance policy have doubled to $236,000. Although they have been spared several of the heavy rains that have hit the region in recent years, his association was dropped by their insurer when the total value of their insured assets exceeded $60 million.
“We appeared on the secondary market,” he said. “It’s terribly expensive.”
In the same time frame, monthly HOA fees — which cover premiums, reserves and insurance maintenance — roughly doubled to nearly $700 a month. In an effort to avoid further pain for the owners, many of whom are retired and living on fixed incomes, the Board decided to delay certain projects such as upgrades to the road re-slowing system and irrigation.
Nationally, 31% of HOAs reported their insurance premiums increased between $100 and $500 per homeowner last year, according to the Community Association Research Foundation. Another 35% increased by less than $100.
To keep their coverage and lower premiums, Foster’s board voted to consider another type of insurance policy that would reduce the total value of the insured association, but shift the cost of interior restoration after a disaster to the owners, which would likely require them to take out more expensive individual policies.
“There are definitely pros and cons to that, but we’re just shocked at what’s happened to this market,” he said. “We had no significant damage.”
Boulder Village Townhomes in Lakeville, Minn. As of 2021, community insurance costs have doubled. (Photo courtesy of Mark Foster) ·Mark Foster
If without any insurance, an option for some family home owners who have paid off their properties, it is not realistic for most housing associations. In many cases, this is required by law or in the Joint Documents. Even if it isn’t, being uninsured would likely put a damper on condo sales, since protection is a requirement for most mortgages.
In some parts of the country, HOA fees and the associated insurance hassles are almost inevitable. About 84% of condos for sale last year had HOA fees attached, along with about a third of single-family homes, Realtor.com reports. More than 75% of listings in metro areas as diverse as Houston, Las Vegas and Orlando are part of an HOA.
Wilson Leung, a real estate agent in California’s Bay Area, said the condo market is noticeably slower than single-family sales because potential buyers have fees and higher property insurance costs.
“It’s definitely affected the general cost of living,” he said.
Home sales across the country are falling, and for-sale inventory is shrinking. As of July 2024, apartments under contract fell 5.5% from a year earlier, according to RedFin data, while listings rose more than 27%.
The problem is most pronounced in disaster-prone parts of Florida and Texas, where insurance premiums and HOA fees are rising especially quickly. In Houston, the median home sale price fell 6.5% between mid-2023 and mid-2024. Jacksonville, Fla., saw a similar decline of 6.6% during that period.
For now, however, housing prices are still holding the national level. Even as more inventory hits the market, average sales prices rose 3.9% through the middle of last year.
Foster, in Minnesota, is a believer in many aspects of apartment living. Cost savings can be significant in services that can be billed in bulk, such as internet and garbage charges. But insurance costs in his community now roughly match those on similarly priced, single-family homes.
“What they pay in insurance, we pay now,” he said. “Maybe even a little more in some cases.”
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages and home insurance.
