Homeowners around the country are starting to worry, as insurance companies are continuing to boost premiums on homeowners associations, if not exiting the market entirely. This trend is making homeownership an increasingly out-of-reach proposition for many Americans.
What's happening?
In 2024, almost two-thirds of HOAs reported increases in insurance premiums, according to the Foundation for Community Association Research. "All of the catastrophes and the disasters have contributed to rising premiums," said Dawn Bauman, executive director of the foundation. "It's not just condominium associations or community associations — it's every piece of the insurance market."
Bauman cited the Surfside condo collapse, reported here by the Miami Herald, as a turning point in insurance companies' dealings with HOAs. This is a problem for numerous reasons, specifically because it is almost impossible in many parts of the country to own a home or condo without being a part of an HOA and paying the accompanying insurance premiums. Per Realtor.com, over 80% of condos on sale in 2024 and one-third of single-family homes were subject to HOA fees.
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Definitely 👍 "The days of having two, three, or four options are long gone," said Eric Skarnes, an insurance broker struggling to find options for his clients around the country, even in landlocked states such as Minnesota and Colorado that are not typically thought of as natural disaster hot spots. "Most associations are just lucky to get a renewal."
Why are HOA's important?
Homeowners associations manage the communal aspects of a neighborhood of houses or condominium units. These include amenities such as security, landscaping, and pest control as well as general cleanliness and maintenance of common spaces. In exchange for this service, homeowners pay a fee to the HOA, usually every month or every three months. Per the Census Bureau, the national average HOA fee was $243 in 2023, reflecting a general increase in pricing over the last five years.
What's being done about this?
Homeowners and renters are in a difficult spot. The American insurance industry is privatized, and its companies are under no obligation to provide their services at a reasonable rate — or at all. Plus, if they pull back on commitments or charge HOAs more as climate risk factors increase, it's understandable from a business perspective.
The onus is on local or state governments to step in and provide assistance where the private sector will not. A 2024 op-ed in The Palm Beach Post proposed that Florida cover the insurance costs incurred by natural disasters such as hurricanes, although such an idea has yet to gain traction in the Sunshine State. Perhaps government-subsidized insurance specifically for natural disasters will seem more feasible to states such as California that are similarly at risk for severe weather incidents.
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