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Lately, many HOA Boards are getting the same unpleasant surprise: insurance premiums are going up—and fast. In some cases, policies that were stable for years are suddenly jumping by 20%, 30%, or even more.
If your HOA recently opened a renewal notice and felt the sting, you’re not alone. But why is this happening? Let’s break it down in simple, real-world terms that Board members can easily understand.
1️⃣ The Weather Is Changing—Literally
More claims = higher risk = higher premiums.
Natural disasters are hitting communities harder and more often. Wildfires, hurricanes, floods, hailstorms, and even extreme heat are happening in places that didn’t see much of them before.
Real-life example:
A coastal HOA that never worried much about floods suddenly experiences heavy rainstorms that cause water damage to multiple units. After filing several claims in just two years, their insurer sees them as a higher risk—and raises premiums.
Even if your HOA hasn’t had a disaster, insurance companies spread risk across regions. So, if there are more claims in your area—even from other communities—it still affects your rates.
2️⃣ Rising Construction Costs
Repairs cost more than ever.
When property damage happens, rebuilding isn’t cheap. The cost of materials (like lumber, concrete, and steel) and labor has risen significantly in recent years. That means insurance companies have to pay out more when claims are filed—and those costs are passed back to policyholders.
Real-life example:
A simple roof replacement that cost $75,000 a few years ago may now cost $120,000. Insurers factor that into your premium because they have to cover those higher replacement costs.
3️⃣ More Lawsuits and Liability Claims
Legal claims are increasing—and insurers are adjusting.
HOAs face more legal action today than ever before: slip-and-fall accidents, contractor disputes, discrimination complaints, or even neighbor-to-neighbor conflicts that involve the HOA.
Real-life example:
A homeowner sues the HOA after tripping on a sidewalk crack in a common area. Even though the HOA settles, the claim gets recorded and affects future liability premiums.
Even if your HOA hasn’t faced lawsuits, insurers calculate risk based on industry trends—and adjust rates accordingly.
4️⃣ Insurance Market Shifts: Fewer Players, Higher Rates
There are simply fewer insurance companies willing to cover HOAs right now.
As risks increase, some insurers are leaving the HOA market entirely, especially in high-risk regions like California, Florida, and parts of the Midwest. With fewer companies competing, the ones that remain have more control over pricing.
Real-life example:
An HOA that used to get quotes from 5-6 insurers may now only receive 1 or 2 quotes—both with higher premiums than expected.
5️⃣ Claims History Still Follows You
Past claims affect future premiums even years later.
If your HOA filed multiple claims in the past (water damage, roof issues, vandalism, etc.), insurers see your community as riskier. This often results in higher premiums, larger deductibles, or limited coverage options.
Real-life example:
A community with three pipe bursts over five years may get flagged as a “high water loss risk,” driving up property insurance costs.
6️⃣ Stricter Underwriting Standards
Insurance companies are becoming pickier.
Insurers are now looking closer at details like building age, maintenance practices, safety features, and even financial reserves. An HOA that doesn’t maintain its property well or has outdated systems may face even higher rates.
Real-life example:
Two similar HOAs apply for coverage. One has a strong maintenance program and healthy reserves; the other has deferred repairs. The HOA with better upkeep may get a better rate even if they’re in the same neighborhood.
What Can HOA Boards Do About It?
Rising premiums are frustrating, but Boards aren’t helpless. Here are a few proactive steps:
✅ Stay on top of maintenance. Prevent issues before they become expensive claims.
✅ Review your claims history. Avoid filing minor claims if you can self-pay small repairs.
✅ Work with a broker who understands HOAs. They can help you shop policies and explain changes.
✅ Invest in risk reduction. Security cameras, better lighting, safety signage, and preventive repairs can all help.
✅ Educate homeowners. A well-informed community supports maintenance efforts that can reduce claims.
Final Thought
HOA insurance premiums are rising for reasons mostly beyond any single Board’s control, but Boards can still take action. Understanding the forces behind the increases helps Boards make smarter decisions, plan better budgets, and have informed conversations with their insurance brokers.
At Grayson Community Management, we help Boards navigate these challenges, understand their options, and protect their communities—both financially and physically.