Rising property insurance costs continue to present challenges for community associations across the country. New data from the Foundation for Community Association Research underscores what many homeowners, boards, and community managers are experiencing: higher premiums, fewer coverage options, and more complex compliance requirements, especially in the condominium housing market.
According to the Foundation’s recent Insurance Coverage Trends Snap Survey report:
- 91% of community associations experienced increases in insurance premiums.
- 17% saw increases exceeding 100%.
- 23% shifted to surplus lines carriers due to lack of traditional options.
- 20% reported losing access to one or more insurance carriers.
- Many reported rising deductibles, decreased limits, and limited market availability in disaster-prone states.
While these trends vary by region and property type, they are clearly placing new financial pressures on boards and homeowners especially when combined with responsibilities for maintaining infrastructure, funding reserves, and meeting lending compliance standards.
CAI’s Recommendations to FHFA
In response to these growing challenges, CAI drafted a letter to Federal Housing Finance Agency Director Bill Pulte offering data-informed recommendations to update condominium lending policies administered by Fannie Mae and Freddie Mac. Our goal is to ensure responsible homeownership remains accessible, lending policies are achievable, and associations are supported in their efforts to maintain safe, well-funded communities.
Key recommendations include:1. Modernize Insurance Requirements
- Allow actual cash value for roof coverage especially for older buildings and in regions where full replacement cost coverage is unavailable or cost prohibitive.
- Adjust the 100% replacement cost insurance standard to reflect what is attainable in the current insurance market.
- Eliminate requirements for proprietary insurance documentation, which insurers are often unable to provide due to liability concerns.
- Replace the 5% deductible cap per unit owner with a more practical requirement such as mandating unit owner HO-6 policies.
2. Increase Transparency Around Loan Eligibility
Currently, condominium associations and their managers do not have direct access to information regarding their eligibility status for Fannie Mae and Freddie Mac-backed loans. CAI recommends secure access to this data so that associations can address concerns proactively and support successful real estate transactions.
3. Provide Realistic Timelines for Reserve Study and Funding Compliance
Reserve funding requirements are essential for long-term building maintenance. However, achieving compliance can take time due to state laws, governing documents, and the need for owner votes. CAI is recommending FHFA offer a phased approach that supports responsible planning while allowing for regional and legal differences.
Survey Insights Support the Need for Action
In a 2024 national survey of nearly 310 community association professionals regarding Fannie Mae and Freddie Mac lending:
- 64% cited liability concerns when completing lender questionnaires.
- 16% of lender rejections were tied to insurance documentation or requirements.
- 14% were related to reserve funding or documentation.
- 28% cited a combination of issues that complicate loan approvals.
These findings reinforce the need for clear guidance, shared responsibility, and updated standards that reflect today’s realities.
The post Navigating Insurance Pressures in Today’s Condo Market appeared first on CAI Advocacy Blog.
Article by Dawn Bauman, CAE • Senior Vice President of Government and Public Affairs, Community Associations Institute
Need to discuss? Connect with Melissa Esham, Deeley’s Community Association Advisor. Call or text 410.213.5579 or email mesham@deeleyinsurance.com.
