Skyrocketing HOA insurance

I serve on the HOA board of a large condominium complex with over fifty different buildings, all built in the 1970s. We've had a couple of sizeable claims in recent years, including a $232K claim for burst pipes and water damage after a freezing event that caused a power outage in early 2024. In 2025, we will need to find a new carrier and our management company has expressed that they are having difficulty finding any that would be willing to touch us. With our current policy expiring Dec 1st, they've only had one company that's been willing to even throw out an informal number. I've heard that other HOAs are also experiencing major price hikes in insurance prices. Here's a snapshot of our premiums over the past couple years:

2021 - $61,961.00 ($20K deductible?)
2022 - $69,347.00 ($20K deductible)
2023 - $128,237.00 ($20K deductible)
2024 - $128,237.00 ($50K deductible)
2025 - $300,000.00? ($150K deductible?)

Hindsight being 20-20, our mistake was not raising our deductible sooner and I don't think we've ever gone a year without having to make a claim.

Reading between the lines, I think that we are becoming uninsurable. Our management company has suggested requiring all owners to provide proof that they've updated their electrical panels, which is doable. They've also floated the idea of abandoning our current water pipe system entirely and having a company trench and install a new system. Over 25 acres, this expense would be astronomical. This is all on top of the unknown costs of a sinkhole that is swallowing our main driveway, and already hiking our dues to catch up on 47 years of deferred maintenance seems untenable.

I'm in the process of trying to find someone who can consult with us on this, but in the meantime I am curious what others here would do in our position.

Thanks.

We had some disappointing news for them (no, we're not getting new roofs courtesy of our insurer - and yes, assessments are going up). The meeting stayed cordial, and it appears that people understood what we told them.

Random thoughts:

* We just had the first of our budget meetings with the membership. The association attorney attended the meeting and talked about challenges in the insurance market. (Prior to the meeting, the attorney mentioned that people have started to talk to lawmakers about possible changes to condo insurance requirements. She also said that some communities are thinking about switching from all-included to bare walls insurance. I'm not sure how that will work - there may be some reasons other than just being nice to the homeowners for having all-included insurance. And changing this involves an amendment to the CC&Rs, and I'm not sure we have the votes to do so.)

* Lawyer also mentioned that insurers bear some responsibility for the mess they're in due to settling ridiculous claims filed by the ambulance chasers. I get it, this is a monetary decision, and it's cheaper to settle instead of fighting a lawsuit. But reining in shyster lawyers would go a long way to stop some of the bleeding.

* Another lawyer in my state wrote an article associations having to obtain insurance on the secondary market, where policies all have high deductibles. Several months ago a poster here mentioned including the deductible in their reserve studies, which makes a certain amount of sense. Unfortunately, you won't have years to accumulate the funds the way you do with roof replacement dollars. So I'm not sure if this would be a workable plan. (Our attorney actually mentioned that you need to keep the deductible separate from operating and reserve funds, so it sounds like it may not even be legal.)

* I think some states are taking steps to shore up the insurance market in their states. I'm wondering about options for pooling the state's condos to maybe spread the risk around. But that's off the top of my head, I haven't thought this through.)

* I started my part of the meeting with a short explanation on why low assessments do not keep expenses down but actually increase them over time. This is going to be an ongoing theme (newsletter articles, etc.). We're coming off five years of boards that thought they could volunteer their way to healthy finances, and I want to change the narrative.

* When I was on the board previously, we would pay out of pocket for repairs if the cost would be close to our deductible. This kept our claim numbers down. We're also raising our deductible for next year to discourage small claims.

* For now I don't have a lot of ideas - the causes of the insurance problems are things that are outside of my control. My personal philosophy with insurance is that it's there to get me back on my feet when something goes badly sideways, it's not there to make me whole whenever a minor event occurs. Unfortunately, I don't think association boards can take that attitude - certainly not condo boards with such high percentages of common elements.

* When I see the insurance woes scaring the investors away, then I'll get really worried.

5 years ago you were insuring 50 multi unit buildings for $62,000? That’s less than $1300 a building. No wonder you rates have increased a lot.

Yea,our insurance went double,come to find out the former property management's sister sold us the policy.

We’ve been increasing our assessments at the maximum for the last three years because our reserves are extremely low, but I suspect our insurance has also jacked up (yet another reason why we got rid of our pool several years ago). And then there were the sewer line disruptions from tree roots – I don’t think that’s as much of a problem today because we brought in an arborist who identified the problem trees and they were cut down (they were near the end of their lives anyway).

Regarding the self-insurance thing, it may be HOAs will have to rethink what they can actually afford to cover or not (clubhouses are one thing, but swimming pools and maybe children's playgrounds not so much). If something has to be shifted to the homeowner's responsibility, that'll likely require an update to the documents, X percentage of homeowners agreeing to it - and you know what type of drama THAT causes.

Meanwhile, I've kicked around updating my circuit panels (one electrician said that should be done every 20 or so years anyway), but it wouldn't be cheap. That's not the HOA's responsibility, although replacing the piping from the point it enters the unit out to the city's main line was mentioned while we were wrestling with the tree roots. Guess that's why I've seeing various pieces of junk mail come through that talk about insuring the lines (because the water company won't pay for repairs!)

It’s been about 12 years since I was on a condo board. I could not understand how an insurance company was quoting the low premiums for multi unit buildings they were back then. After a major hail storm came through the area in 2010 and what the insurers had to pay out was staggering.

I feel for HOA owners in several states, but to be quite honest some of the insurance increases you are seeing has been caused by the legislatures of those states.

Legislatures favored low standards for builders of multi family buildings and condos built in the 70s and 80s had no building standards to reduce storm damage.

Some stats’s over regulation had encouraged major insurers to leave the market resulting in less completion.

Some states didn’t have enough regulation and allowed insurers to maintain insufficient reserves and to compete in the market keeping rates keeping competition artificially high and rates artificially low until very high claim periods corrected the situation.