Condo insurance premiums are soaring nationwide

The homeowner insurance woes facing many Americans are having a unique impact on condominium owners, too.

Aging condos and deferred maintenance are sending condo insurance premiums soaring through the roof, the Wall Street Journal reported. Those particular factors are in addition to the insurance issues facing homeowners across the board, such as losses from natural disasters and the high costs of rebuilding.

More than nine in ten community associations reported insurance premiums increasing at the last renewal, according to a survey last year from the Foundation for Community Association Research. A majority of those community associations paid for those increases by raising dues or imposing a special assessment. Others tapped operating funds or lines of credit.

As insurance premiums surge for condo owners, so do condo association fees. Dues rose 20 percent between 2022 and 2024, according to Rexera’s analysis of 1,800 associations. If homeowners fall behind on those dues, foreclosure is often an option for the associations.

The pain of the insurance premium jumps are being felt most acutely in states such as Florida and California, where homeowners are in an insurance bind regardless of property type. Those states are prone to natural disasters — fires, hurricanes, earthquakes — that are worsening due to climate change, and in Florida, a new state law requires older buildings to meet stronger safety standards.

Insurance deductibles are rising too, shifting the burden of financial risk from insurers to homeowners. Some communities are at risk of falling out of compliance with lending rules, which could restrict homeowners from getting mortgages from Fannie Mae or Freddie Mac.

There are approximately 10 million condo, co-op or townhome owners in the United States, according to the National Association of Home Builders. The median condo association fee, which goes towards insurance, property maintenance and amenities, is $480 a month, according to Attom.

Options to reduce insurance costs are largely limited. Among the possibilities are to not report small claims or adjust bylaws to overlap a master policy with individual owner policies, according to a condo association lawyer based in the Midwest.

— Holden Walter-Warner

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