What Every HOA Board Needs to Know About Rising Insurance Costs

Introduction

If you’re on an HOA board and haven’t reviewed your insurance policy lately, now’s the time. In this recent episode of The Uncommon Area, host Matthew Holbrook sat down with Cory Neubauer, insurance expert at NEXTIER Insurance Services and host of the Next Level Living podcast, to unpack what’s really going on in the insurance world—and why many HOAs are being hit with staggering premium increases.

Why Are Insurance Premiums Skyrocketing?

Corey breaks it down into two major drivers:

1. Inflation and Reconstruction Costs: The cost to rebuild properties after a total loss has surged. Material, labor, and supply chain issues mean it’s more expensive than ever to restore a damaged or destroyed property.
2. Increased Catastrophic Losses: Fires, floods, and other extreme weather events are more frequent and severe. Insurance carriers, especially those with national or global portfolios, are spreading this risk across the board, affecting all policyholders.

The result? HOAs in high-risk regions—especially in fire-prone parts of California—are seeing 5x or even 10x increases in premiums.

The Admitted vs. Non-Admitted Dilemma

One of the more eye-opening parts of the discussion centers on admitted vs. non-admitted carriers. Admitted carriers are tightly regulated and may be unable to raise rates fast enough to match actual risk—so many are simply pulling out of markets like California. HOAs are increasingly forced to turn to non-admitted carriers, which offer fewer restrictions but at a much higher cost.

Deductibles, Risk Transfer, and the Per-Unit Trap

Raising deductibles is often seen as a go-to cost-control measure, but it doesn’t always make a meaningful difference. As Corey explains, moving from a $10K to $50K deductible on a multimillion-dollar property might only reduce premiums by a few percentage points. Some insurers now require per-unit deductibles, which can significantly impact communities with hundreds of homes.

The Communication Gap

One of the biggest pitfalls? Boards not communicating early and often. Corey advises boards to get quotes early—at least 120 days before renewal—and to work directly with brokers and management companies. Delaying communication can lead to resident frustration, especially when a sudden increase results in special assessments or dramatic dues hikes.

Risk Management Is Now Strategic

Gone are the days of treating insurance as a checkbox line item. Today, it’s a strategic consideration:

• Understand your risk profile. Are you in a high-fire-risk area? Have you had recent claims?
• Work with brokers who specialize in HOAs. Not all insurance providers understand the nuances of community associations.
• Avoid unnecessary claims. Insurers want to see proactive, well-maintained properties.
• Plan for spikes. Cory’s litmus test: If your insurance line item increased 5x overnight, would your budget survive?

Why This Matters for Homeowners

This isn’t just a board issue. Rising premiums and limited coverage affect everyone—especially when it comes to mortgage qualification. HOAs that can’t maintain full insurance may become ineligible for FHA loans, limiting who can buy in the community and depressing home values.

Final Thoughts

This episode of The Uncommon Area isn’t just informative—it’s a wake-up call. Insurance isn’t a fixed cost anymore. It’s a volatile, high-impact budget item that boards must approach with foresight, communication, and expert support.

As Cory says, the market is shifting. The best thing an HOA board can do? Stay educated, stay proactive, and start planning—before your next renewal hits.