Sunday, February 16, 2025
HomeMarketInsurers are dropping HOAs, threatening the condo market

Insurers are dropping HOAs, threatening the condo market

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Insurance is getting 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 exiting the business of covering HOAs’ common property entirely, citing rising losses from extreme weather and aging buildings. The steep premium hikes usually end up passed on to individual owners in the form of higher monthly dues.

For many insurers, HOA coverage is a relatively niche product, but the 74 million Americans who live in those communities rely on what’s known as master policies to insure common property like sidewalks, playgrounds, and in the case of multifamily buildings, roofs and certain interior and exterior features.

These higher insurance costs are yet another expense that’s making homeownership a challenge for a growing swath of Americans. They are also increasingly unavoidable: In many parts of the country, HOA communities make up a growing proportion of local housing stock.

“All of the catastrophes and the disasters have contributed to rising premiums,” said Dawn Bauman, executive director for the Foundation for Community Association Research. “It’s not just condominium associations or community associations — it’s every piece of the insurance market.”

Read more: Should you buy a home with a homeowners’ association?

The 2021 Surfside, Fla., condo collapse was a turning point that made coverage harder to keep, particularly for condo associations, Bauman said. Insurance issues have also affected HOAs made up of single-family homes, but they’re most profound in communities of apartments, rowhouses and townhomes because those developments have more communal features.

Thousands of miles from Florida, in suburban Minneapolis, insurance broker Eric Skarnes is having increasing trouble finding options for his clients in Minnesota and Colorado. In both states, insurers fear 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 around 500 HOAs. “Most associations are just lucky to get a renewal.”

Mark Foster sits on the board for an 84-unit complex in Lakeville, Minn. Since 2021, premiums on his HOA’s master 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 surpassed $60 million.

“We got booted to the secondary market,” he said. “It’s terribly expensive.”

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