Property insurance availability and affordability have officially reached emergency status. This past August, Hawaii Governor Josh Green signed an emergency proclamation to stabilize the state’s volatile insurance market and protect residents from financial strain. Communities everywhere are grappling with a hardening insurance market marked by premium increases, restricted coverage, and carriers fleeing markets altogether.

While the situation is particularly alarming in states like Florida, which has seen the highest increase (68%) in insurance premiums, the crisis stretches far beyond coastal communities prone to hurricanes. Climate change and extreme weather events also impact inland states. As severe storms cause billions in damage in the U.S. heartland, insurers are even dropping customers in states like Iowa.

Extreme weather isn’t the only factor driving up insurance costs for HOAs. Others include increased litigation against HOAs, increasing property values, inflation’s impact on construction costs, and fewer players in the insurance market. The consequences of this “perfect storm” can be dire. Housing affordability, already a crisis, is worsening due to rising insurance costs. Condo owners and investors are losing money as inventory soars in places like Texas and Florida. 

HOAs everywhere are increasing assessments, bringing more unwelcome cost increases to homeowners. They may also resort to risky tactics like deferring maintenance or decreasing reserve funding. Here are some savvier steps HOAs and management companies can take to protect their communities and bottom lines in the face of the ongoing insurance crisis.

Limit exposure to liability and noncompliance.

We hope by now you’ve reviewed your community’s bylaws to ensure they don’t include racially restrictive covenants—remnants from a discriminatory history that often go unnoticed for decades until a lawsuit is filed citing the Fair Housing Act. AI solutions like CINC’s Cephai can quickly analyze your documents and pinpoint problematic language (along with professional legal counsel).

Now is a great time to review your vendor lineup and ensure they all have adequate insurance coverage of their own. HOAs should also implement risk management strategies like conducting regular inspections, properly maintaining common areas, and implementing other safety measures to protect against claims and minimize insurance costs in the long term.

Suppose you must charge additional fees to cover an emergency expense or reserve shortage. In that case, CINC’s sub-ledger module helps ensure all your documentation is in order and compliant with Florida law by keeping special assessment activity separate from regular assessments.

Review policies and shop around.

HOA boards should prioritize an annual review of their insurance policies. This allows boards to assess whether additional coverage is needed and to ensure that the existing policy aligns with the governing documents. Regular evaluations help boards make necessary adjustments and take advantage of potential changes in insurance rates to secure the most favorable terms.

Fostering strong insurance provider relationships is essential to ensure your provider remains proactive in addressing your association’s needs and advocating on your behalf. By maintaining open communication and trust, you can better manage your insurance coverage and respond effectively to any changes.

Explore new revenue sources and efficiencies.
To hedge against mounting challenges, efficiency and innovation will be crucial. The traditional all-inclusive, fee-only model is no longer viable for sustained growth. Management companies are increasingly adopting strategies like charging extra for resale packages, adding contract fees, leveraging bank partnerships, or entering revenue-sharing agreements with third-party providers.

Embracing technology, automation, and outsourcing can streamline routine tasks, saving time and money. One solution is to invest in self-service platforms like CINC’s AI-powered Homeowner App.