If your HOA’s insurance renewal landed on the agenda this quarter, you already know the conversation. The premium is up, sometimes 30 to 50 percent over what your association paid two years ago. A board member is on the hunt for a “better” carrier. Someone else wants to know why nothing the management company brings back gets close to 2020 numbers.
We work with HOA boards across Southern California, and our blunt take is this: there is no unicorn carrier hiding out there. HOA insurance costs are elevated for structural reasons that aren’t going away soon, and the boards making the best decisions right now are the ones that stop chasing a lower number and start making intentional tradeoffs they can defend to owners.
Here is what’s actually driving the premium, what your options really are, and what you should think through before you pull a lever to lower the rate.
Why HOA premiums are stuck high
Three forces keep the market firm.
Reinsurance losses everyone shares. Carriers spread risk by handing portions of policies off to other carriers. So even a company with no direct policies in Maui or Paradise paid a price when wildfires hit. When reinsurance gets expensive, and it has, every downstream policy gets repriced. Your community is paying part of someone else’s bad year.
Communities don’t get younger. Every common-area system in your association is one year older this year than last, unless it was replaced. Older roofs, older plumbing, older boilers, older asphalt. Older means more claims. Your underwriter is reading the same actuarial trend you are.
Rebuild costs outran inflation. Most reserve studies assume around 3 percent annual inflation. During the inflation spike of 2022 and 2023, repair and replacement costs climbed closer to 8 percent in many trades, which compounds. To stay even, carriers pushed premiums up at roughly that pace. That’s not gouging. That’s math.
If you walk into a renewal expecting to undo any of those three forces by getting one more quote, you’re going to keep being disappointed.
The four levers boards usually consider
When the premium comes back high, most boards we work with end up looking at four moves. None of them are bad on their own. All of them have consequences you need to walk into with eyes open.
1. Raise the deductible
A $5,000 deductible used to be standard. It’s not unusual now to see boards lift it to $25,000 or $50,000.
This works. The premium savings are real. The catch is what happens at claim time. We’ve watched owners file a $20,000 claim against a $50,000 deductible and not understand why nothing was covered. Some boards push the deductible payment back onto the owner whose unit triggered the claim, which can be brutal for a homeowner who didn’t realize the rules had changed.
If your board takes this route, write the new deductible into the resolution, into the owner notification letter, and into the welcome packet for new owners. Communicate it three different ways. Don’t assume one mailing did the job.
2. Drop replacement cost below 100 percent
Some boards have moved from 100 percent replacement coverage to 75 percent or 50 percent to take pressure off the premium.
Be careful here. Conventional lenders, the kind backed by Fannie Mae and Freddie Mac, generally require 100 percent replacement coverage for the building. The moment your association drops below that line, future buyers in your community may be pushed into non-warrantable condo loans. Those loans typically require 20 percent or more down, carry higher rates, and come from portfolio or non-QM lenders. Fewer buyers qualify, which puts downward pressure on every owner’s resale value.
Saving the association money on premiums but quietly costing every owner several percent on their home value is a tradeoff most boards would not consciously make. Make sure you’ve actually weighed it.
3. Change what the association covers
This is the most ambitious move and the hardest. Reducing the scope of what the association insures (versus what individual owners insure) almost always means amending your CC&Rs. In California that typically requires a supermajority of all owners, often 67 percent.
Plan on a real campaign. Town halls, written explanation, follow-up. Owners feel like they have already paid for the coverage they have, and they’re not always wrong. Larger communities of 100 or more owners, and rental-heavy communities, are particularly hard to move because absentee owners are tough to reach. We’ve seen this work in mid-sized communities where the board built a clear case. We’ve also seen it stall for a year while ballots dribbled in.
4. Run a tighter shop
Less dramatic, but worth saying. Underwriters look at loss runs. Communities with active risk-reduction programs (regular roof inspections, slip and fall prevention, water-shutoff testing, written vendor insurance requirements) tend to renew better than communities with the same age and stock that have a string of small claims. This won’t crash your premium next year, but it shifts the slope you’re climbing.
What to actually do at your next renewal
A few things we recommend boards do before the renewal cycle, not during it.
First, ask your management company for a clean comparison. At least three quotes against current coverage with each line item visible, plus what each carrier requires of the association.
Second, decide ahead of time how much premium increase you can absorb without raising dues, how much would force a special line in the budget, and what would trigger a special assessment. That decision is much easier to make in calm air than three days before renewal.
Third, if you’re considering any of the four levers above, write down the tradeoff in plain English and bring it to the owners before the vote, not after. Owners forgive a board that explained itself. They rarely forgive a board that surprised them.
Fourth, don’t make insurance the first thing you cut. It’s the worst category to be wrong about.
If your board is staring at a renewal and wondering whether it’s getting a fair shake, working with an HOA management firm that handles dozens of renewals every year is one way to pressure-test the quotes you’ve received and see what your peers in similar communities are paying.
The conversation worth having
The insurance market isn’t going to drop back to 2020 for you. It’s going to keep rewarding communities that maintain themselves, document their risk, and make grown-up decisions about coverage.
The board’s job isn’t to deliver the lowest number. It’s to make a defensible decision and communicate it to owners so nobody is surprised when the next claim or the next renewal hits.
If you want to compare what your community is paying against what other HOAs your size are paying, request 3 quotes from HOA management companies that handle insurance bid management as part of their service. Three quotes give you a real read on the market without committing to anything.
