Guide
Why Community Association Insurance Premiums Keep Rising
Why Community Association Insurance Premiums Keep Rising
Community association insurance is in a hard market. Here's why master policy premiums keep climbing and what your board can do about it at renewal.
Community association insurance is in a hard market. Here's why master policy premiums keep climbing and what your board can do about it at renewal.
Insurance runs in cycles. For years the market was "soft," which means carriers competed hard for business and many associations watched their premiums hold steady or even fall. That is not the market we are in now.
For community associations, the market has turned hard and stayed that way. Carriers are raising premiums on master policies, tightening what they are willing to cover, and in some cases stepping away from association business altogether. The reasons are not complicated: more frequent and severe weather losses, rising construction and material costs, higher reinsurance expenses that get passed down the line, and aging buildings that cost more to repair.
What's Driving the Hard Market
A handful of forces are pushing premiums up across the board:
More frequent and severe weather losses, which insurers price into every renewal
Higher reinsurance costs, the insurance that carriers buy for themselves, which gets passed along to policyholders
Construction and labor inflation, which raises the replacement cost carriers have to insure
Stricter underwriting, with carriers now expecting current reserve studies, documented maintenance, and accurate property valuations before they offer their best terms
The Foundation for Community Association Research has reported that, nationally, a large share of associations saw their premiums climb by hundreds of dollars per homeowner in a single year. The exact figure varies by community, but the direction has been consistent, and most forecasts expect the increases to continue.
What It Means for Your Association
When master premiums rise, a board has a limited set of levers, and most of them affect owners directly. Associations are raising dues, levying special assessments, accepting higher deductibles to keep premiums manageable, and in some cases moving from broad "all-in" coverage toward "bare walls" coverage that shifts more responsibility onto individual unit owners.
That last shift matters for everyone in your community. As the association covers less of the interior, each unit owner's own HO-6 policy has to cover more. If you sit on the board, this is worth communicating clearly to your owners. If you are a unit owner, it is worth a call to your own agent to make sure your policy actually fills the gap.
What Your Board Should Do at Renewal
The single most useful habit in a hard market is to start early. Do not wait for the renewal quote to land before you react. Ask your agent for a premium indication as far ahead of renewal as you can, so you know whether you are looking at a normal increase or a significant one.
If the increase comes in higher than your board is comfortable with, it may be time to bid the program out and see what the wider market offers. Our companion article on insurance specifications and the bidding process walks through how to do that the right way. Strong documentation helps here too. Associations that can show current reserve studies, a clean maintenance record, and accurate valuations tend to get better terms, because they are easier for an underwriter to say yes to.
Balance Coverage and Price
Through all of it, the rule that held up through past market cycles still holds today: balance coverage against price. The cheapest premium is not a win if it leaves your association underinsured. The goal is a complete program at a reasonable cost, not the lowest number on the page.
If your association is facing a tough renewal, our team specializes in community association coverage across Western New York and is glad to take a look. Contact us and we will walk through your options.
Insurance runs in cycles. For years the market was "soft," which means carriers competed hard for business and many associations watched their premiums hold steady or even fall. That is not the market we are in now.
For community associations, the market has turned hard and stayed that way. Carriers are raising premiums on master policies, tightening what they are willing to cover, and in some cases stepping away from association business altogether. The reasons are not complicated: more frequent and severe weather losses, rising construction and material costs, higher reinsurance expenses that get passed down the line, and aging buildings that cost more to repair.
What's Driving the Hard Market
A handful of forces are pushing premiums up across the board:
More frequent and severe weather losses, which insurers price into every renewal
Higher reinsurance costs, the insurance that carriers buy for themselves, which gets passed along to policyholders
Construction and labor inflation, which raises the replacement cost carriers have to insure
Stricter underwriting, with carriers now expecting current reserve studies, documented maintenance, and accurate property valuations before they offer their best terms
The Foundation for Community Association Research has reported that, nationally, a large share of associations saw their premiums climb by hundreds of dollars per homeowner in a single year. The exact figure varies by community, but the direction has been consistent, and most forecasts expect the increases to continue.
What It Means for Your Association
When master premiums rise, a board has a limited set of levers, and most of them affect owners directly. Associations are raising dues, levying special assessments, accepting higher deductibles to keep premiums manageable, and in some cases moving from broad "all-in" coverage toward "bare walls" coverage that shifts more responsibility onto individual unit owners.
That last shift matters for everyone in your community. As the association covers less of the interior, each unit owner's own HO-6 policy has to cover more. If you sit on the board, this is worth communicating clearly to your owners. If you are a unit owner, it is worth a call to your own agent to make sure your policy actually fills the gap.
What Your Board Should Do at Renewal
The single most useful habit in a hard market is to start early. Do not wait for the renewal quote to land before you react. Ask your agent for a premium indication as far ahead of renewal as you can, so you know whether you are looking at a normal increase or a significant one.
If the increase comes in higher than your board is comfortable with, it may be time to bid the program out and see what the wider market offers. Our companion article on insurance specifications and the bidding process walks through how to do that the right way. Strong documentation helps here too. Associations that can show current reserve studies, a clean maintenance record, and accurate valuations tend to get better terms, because they are easier for an underwriter to say yes to.
Balance Coverage and Price
Through all of it, the rule that held up through past market cycles still holds today: balance coverage against price. The cheapest premium is not a win if it leaves your association underinsured. The goal is a complete program at a reasonable cost, not the lowest number on the page.
If your association is facing a tough renewal, our team specializes in community association coverage across Western New York and is glad to take a look. Contact us and we will walk through your options.
