Navigating HOA Insurance: Strategies to Protect Your Community

Insurance is one of the most important yet misunderstood responsibilities for a homeowners association (HOA). For many boards, it’s also one of the largest line items in the annual budget—and one that feels increasingly out of their control. Premiums are rising. Coverage is shifting. Risk factors seem to multiply every year. And in today’s market, boards are being asked to do more than ever to safeguard their communities while staying fiscally responsible.

In a recent episode of The Uncommon Area, host Matthew Holbrook sat down with Jonathan Naranjo of Liberty Naranjo to tackle this complex topic head-on. Their conversation explored what’s driving insurance changes, how boards can identify and mitigate risks, and what strategies exist to protect both the association and its homeowners. The discussion provides valuable takeaways for any board member, manager, or industry professional tasked with navigating the “wonderful world of insurance.”

The Rising Costs of HOA Insurance

One of the first points discussed was the reality of escalating premiums. Communities across California, Texas, and beyond are seeing double-digit increases in their insurance renewals. This isn’t simply a case of carriers wanting more profit; it’s tied to several systemic issues.

Natural disasters such as wildfires, floods, and hurricanes have increased both in frequency and severity. Each catastrophic event drives significant claims, which ripple across the entire insurance market. Even if a particular HOA has never filed a claim, they’re still part of a larger risk pool that absorbs these costs.

Liability claims also play a role. Slip-and-fall accidents, property damage disputes, and other legal claims against associations can drive settlements into six or seven figures. Carriers adjust their pricing to cover not just today’s claims, but tomorrow’s uncertainties.

For boards, this can feel overwhelming. But understanding why premiums are increasing is the first step toward creating strategies to manage those costs.

Identifying and Mitigating Risk Factors

Naranjo emphasized that insurance is not just about transferring risk—it’s about actively managing it. The more a community can demonstrate responsible risk management, the more attractive it becomes to carriers.

Risk factors can take many forms. Deferred maintenance, such as aging roofs or unmaintained irrigation systems, increases the likelihood of claims. Lack of compliance with building codes or safety standards creates vulnerabilities that insurers notice. Even governance issues, like inconsistent enforcement of community rules, can add to the perception of risk.

Boards that invest in preventive maintenance programs, keep accurate records, and show a history of responsible governance position themselves for better insurance outcomes. For example, a community that schedules regular roof inspections and proactively addresses small repairs will not only prevent expensive claims but also demonstrate to carriers that they are serious about reducing risk.

Understanding Admitted vs. Non-Admitted Carriers

One of the most misunderstood areas of insurance is the distinction between admitted and non-admitted carriers.

• Admitted carriers are licensed by the state and backed by state guaranty funds. This means that if the carrier were to go insolvent, the state provides a safety net for policyholders. These carriers are typically more regulated, which can provide boards with peace of mind.
• Non-admitted carriers operate outside of state regulation, giving them greater flexibility in pricing and coverage terms. While this can be beneficial in challenging markets where admitted carriers won’t provide coverage, it also carries more risk since there is no state safety net if the company fails.

For boards, the choice between admitted and non-admitted carriers often comes down to availability and cost. In high-risk areas, non-admitted carriers may be the only option. The key is understanding the trade-offs and making sure the board communicates these decisions transparently to the membership.

Communicating Effectively with Homeowners

Insurance decisions can quickly become a flashpoint in communities if they aren’t communicated clearly. When premiums rise, homeowners naturally want to know why—and boards that stay silent risk creating frustration or mistrust.

Holbrook and Naranjo emphasized the importance of transparency. Boards should explain the factors driving cost increases, what steps they’ve taken to shop the market, and how they’ve evaluated risk. Providing examples can make the issue more relatable:

• “Wildfire risk in our area increased due to last year’s fire season, which affected all carriers in California.”
• “We reviewed multiple carriers, including both admitted and non-admitted options, and selected the policy that offered the best protection for our community.”
• “Our maintenance programs help keep costs down, but the market-wide increase is something every HOA is facing.”

When homeowners understand the bigger picture, they’re more likely to support board decisions, even if those decisions involve higher dues or special assessments.

Planning Ahead: Proactive Insurance Strategy

The strongest takeaway from the episode was the value of planning ahead. Boards that treat insurance as a once-a-year renewal process often find themselves caught off guard by premium spikes. In contrast, boards that view insurance as an ongoing strategic responsibility are better positioned to adapt.

Here are a few proactive steps boards can take:

1. Start renewals early. Begin conversations with your broker months before the policy expires. This allows time to shop the market and explore options.
2. Review deductibles. Higher deductibles can reduce premiums, but boards must ensure they have reserve funds to cover potential claims.
3. Invest in risk reduction. Preventive maintenance, updated safety features, and compliance with codes can all reduce risk and improve insurability.
4. Educate the community. Host informational sessions or include updates in newsletters so homeowners understand the realities of the insurance market.
5. Build long-term relationships with carriers. Consistency and loyalty can pay off when markets tighten and carriers prioritize renewing with trusted associations.

Why This Matters

HOA insurance is more than a line item in the budget—it’s a cornerstone of community stability. Without adequate coverage, associations expose themselves and their members to catastrophic financial loss. Without thoughtful communication, they risk eroding trust and creating conflict.

By understanding the forces shaping the insurance market, proactively managing risks, and communicating openly, boards can protect their communities while keeping homeowners informed and engaged.

Closing Thoughts

As Holbrook and Naranjo made clear, insurance doesn’t have to be a mystery. While boards can’t control the broader market, they can control how they prepare, how they mitigate risks, and how they communicate with their communities.

For HOA leaders looking to strengthen their understanding of insurance, this episode of The Uncommon Area offers a roadmap filled with practical insights. To dive deeper into the conversation and hear more examples from the field, listen to the full episode today.

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