Insurance is becoming harder to find and more expensive in much of the country. Just ask homeowners associations.
Mirroring trends in the single-family home market, insurers are boosting premiums or abandoning the business of fully covering common property HOAs, citing rising losses from extreme weather and aging buildings. The steep premium hikes are usually passed on to individual owners in the form of higher monthly fees.
For many insurers, HOA coverage is a relatively niche product, but the 74 million Americans who live in those communities rely on what are known as master policies to insure common property such as sidewalks, playgrounds, and in the case of multifamily buildings, roofs and certain interior design. and external features.
These higher insurance costs are another cost that makes homeownership a growing swath of Americans. They are also increasingly unavoidable: In many parts of the country, HOA communities make up a growing share of the local housing stock.
“All the catastrophes and disasters have contributed to rising premiums,” said Dawn Bauman, executive director of the Foundation for Community Association Research. “It’s not just condominium associations or community associations — it’s every piece of the insurance market.”
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The 2021 Surfside, Fla., condo collapse was a turning point that made coverage harder to maintain, especially for condos, Bauman said. Insurance problems have also affected HOAs consisting of single-family homes, but they are very pervasive in communities of apartments, rowhouses and townhomes because those developments have more common features.
Thousands of miles from Florida, in the suburbs of Minneapolis, insurance broker Eric Skarnes is increasingly having trouble finding options for his clients in Minnesota and Colorado. Insurers in both states are concerned about hail damage, which can pummel roofs.
“The days of having two, three or four options are long gone,” said Skarnes, whose company, Insurance Warehouse, insures about 500 hoas. “Most associations are just lucky enough to get a renewal.”
Mark Foster is on the board for an 84-unit complex in Lakeville, Minn. Since 2021, premiums on his HOA’s primary insurance policy have quadrupled to $236,000. Despite being spared from several severe hailstorms that have hit the region in recent years, his association was dropped by their insurer when the total value of their insured property exceeded $60 million.
“We have started moving into the secondary market,” he said. “It’s terribly expensive.”
