Insurance coverage for homeowners’ associations (HOAs) is becoming increasingly difficult to secure and more expensive across the U.S., mirroring trends in the broader housing market. The hike in premiums, coupled with some insurers exiting the HOA market altogether, is straining budgets, with higher costs ultimately passed on to homeowners through increased monthly dues.
HOA insurance, though a niche product for many insurers, is crucial for the 74 million Americans who live in these communities. Common areas—such as playgrounds, sidewalks, and, for multifamily buildings, roofs and shared interior/exterior features—are typically covered by what’s known as a master policy. But as extreme weather events and aging infrastructure take a toll, premiums for these policies are soaring, adding to the financial burden on homeowners.
The insurance challenges facing HOAs are another hurdle for many homeowners already grappling with rising costs. And, with HOA communities making up a growing portion of housing stock in certain regions, these issues are becoming harder to avoid. “All of the catastrophes and the 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.”
The 2021 collapse of a Florida condominium complex brought attention to the vulnerabilities of HOA and condo insurance markets, making coverage more difficult and costly to secure, particularly for condo associations. While single-family HOA communities are not immune, the impact is more significant in multi-unit developments with shared infrastructure.
Insurance broker Eric Skarnes, based in suburban Minneapolis, is experiencing firsthand the difficulty in finding affordable coverage for clients in states like Minnesota and Colorado, where hail damage to roofs is a major concern. “The days of having two, three, or four options are long gone,” said Skarnes, whose company insures approximately 500 HOAs. “Most associations are just lucky to get a renewal.”
In Lakeville, Minnesota, Mark Foster’s HOA is feeling the impact firsthand. Since 2021, premiums for the 84-unit complex’s master insurance policy have quadrupled, reaching $236,000. Despite being spared from severe hailstorms in recent years, the HOA was dropped by its insurer after the total insured value of the property surpassed $60 million. The association was then forced to seek coverage on the secondary market, which is significantly more expensive.
As a result, HOA fees in Foster’s community have roughly doubled, now nearing $700 per month. To alleviate the strain on owners, many of whom are retired and living on fixed incomes, the board has postponed projects like road resurfacing and irrigation system upgrades.
Nationally, 31% of HOAs reported insurance premium hikes between $100 and $500 per homeowner last year, with another 35% seeing smaller increases, according to the Foundation for Community Association Research. To lower costs, Foster’s HOA is considering switching to a policy that would reduce the total insured value but shift the burden of rebuilding certain interior areas onto individual owners, requiring them to take out more expensive personal policies.
Opting out of insurance is a potential solution for some single-family homeowners who have fully paid off their properties, but it’s generally not an option for condo associations. Insurance is often a legal requirement, and not having coverage would likely make it difficult to sell units, as most mortgage lenders require insurance to approve loans.
In many parts of the U.S., HOA fees and associated insurance issues are unavoidable. Last year, 84% of condos listed for sale included HOA fees, along with around one-third of single-family homes, according to Realtor.com. Metro areas like Houston, Las Vegas, and Orlando saw more than 75% of listings tied to HOAs.
Wilson Leung, a real estate agent in the Bay Area, noted that rising HOA fees and insurance costs have slowed the condo market, as prospective buyers shy away from higher monthly fees. “That has definitely impacted the general cost of living,” he said.
Nationwide, condo sales have slowed, with listings piling up. Redfin data from July 2024 shows a 5.5% drop in condos under contract compared to a year earlier, while available inventory has surged by 27%. The issue is particularly pronounced in disaster-prone states like Florida and Texas, where premiums and HOA fees have spiked. For instance, the median condo sales price in Houston fell 6.5% between mid-2023 and mid-2024, while Jacksonville, Florida, saw a similar decline of 6.6%.
Despite these challenges, condo prices are holding steady on a national level. Even with increased inventory, the average sale price rose by 3.9% through mid-2024.
Foster, whose HOA is experiencing the pinch of rising insurance costs, sees some of the benefits of condo living, such as cost savings on services like internet and waste management. But the insurance premiums in his community are now comparable to those of single-family homes in the area, and in some cases, even higher. “What they’re paying in insurance, we’re now paying,” he said. “Maybe even a little bit more in some cases.”
As insurance premiums continue to climb and HOA fees follow suit, homeownership in many areas is becoming an increasingly expensive and challenging prospect for a growing number of Americans.
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