In recent years, the insurance landscape has shifted dramatically. At Blue Lime, we are particularly interested in how these changes have affected homeowner associations (HOAs)— who are facing an increasingly complex challenge as they work to secure affordable, comprehensive insurance coverage.
In 2025, this issue has reached a breaking point. Premiums are rising at unprecedented rates; policies are being canceled, restricted, or changed; and insurance requirements from government-backed entities are harder to meet. Many HOAs are struggling to obtain the coverage they’ve grown accustomed to.
As an industry leader in insurance solutions for HOAs, we believe that helping associations understand and address these challenges is one of the best ways we can offer support during this turbulent time. Let’s go over the main challenges in the HOA insurance industry today, and discuss what’s being done about it.
The Problem: High Cost, Low Coverage
A Perfect Storm of Insurance Market Pressures
The cost of insurance for community associations has risen dramatically across the country. Premiums have doubled—or even tripled—in just a few years. The reason for this is a bit complicated. Rather than just one factor affecting prices, there are several: natural disasters, inflation, supply chain instability, and soaring construction costs, to name a few. Plus, hurricanes, wildfires, floods, and other extreme weather events are happening more frequently and with greater intensity.
Taking all of these variables into account, insurers are becoming increasingly cautious about the risks they’re willing to underwrite.
Shrinking Coverage and Rising Deductibles
This caution translates into higher premiums, larger deductibles, and in some cases, complete withdrawal from high-risk markets. Even associations who have enjoyed long-standing relationships with their insurers are now facing non-renewals or stripped-down coverage with significant exclusions for critical perils like wind or water damage. In some cases, insurance carriers are exiting entire states or regions, leaving HOAs with fewer viable options.
Additionally, insurers are becoming more wary of cases they deem “high risk.” A history of claims, lack of proper maintenance, or failure to make recommended repairs can now lead to significant increases in premiums, or it may lead to coverage being denied completely.
For these reasons and more, many HOAs find themselves facing impossible decisions. To maintain even basic coverage, they must accept higher deductibles, reduced limits, or coverage exclusions. But accepting these policies makes them more financially exposed—not only as they work to pay their monthly premiums, but also as they face the risk of having to pay out-of-pocket for events that their policy no longer covers.
These changes don’t just affect the association’s bottom line—they can have a direct impact on homeowners themselves. Increased premiums and deductibles may force associations to impose higher dues or special assessments. And when coverage becomes inadequate, the property’s value may suffer, reducing marketability and deterring future buyers.
Regulatory Pressures from Fannie Mae and Freddie Mac
Although insurance coverage is becoming less extensive and more expensive, the need for insurance remains constant. Community associations still face pressure to comply with insurance requirements set by Fannie Mae and Freddie Mac, the two largest government-sponsored enterprises (GSEs) that back mortgage loans in the United States. These companies require that associations carry certain levels and types of insurance in order to qualify for loan eligibility.
But with decent insurance options dwindling, many associations are finding it difficult—or even impossible—to meet these coverage mandates. If an HOA cannot secure the “right” insurance, the properties within that community may become ineligible for GSE-backed financing. This can drastically affect unit sales and property values. Additionally, it can create serious financial strain for associations trying to stay afloat.
The Solution: Big Changes with Big Impact
Addressing the problems in the HOA insurance industry is no small feat, and it’s an impossible fight for individual associations to fight on their own. The Community Associations Institute (CAI) is a leading advocacy organization for HOAs and similar organizations. They are taking a stand against the insurance crisis and are actively exploring and pursuing potential solutions. Their efforts include:
1. Fighting for Insurance Market Reform
CAI is urging state and federal lawmakers to enact reforms that would help stabilize insurance markets. This includes proposals that would:
- Incentivize insurers to remain in high-risk regions
- Regulate premium increases more stringently
The goal with such legislation is to restore balance in the market so that community associations can access fair and reasonable coverage.
2. Encouraging Risk Mitigation Programs
The higher the risk, the harder (or more expensive) to insure. For this reason, another potential solution is to encourage associations to proactively reduce their exposure to risk. In other words, if HOAs can demonstrate a reduced risk profile, insurers may be more willing to offer affordable, comprehensive policies.
Reducing risk for HOAs may look like:
- Reinforcing roofs or other worn down structures
- Using fire-retardant landscaping
- Implementing stormwater management systems
- Keeping regular inspection and maintenance schedules
- Updating aging infrastructure (sidewalks, stairwells, parking lots, etc.)
- Increasing safety measures in public areas (fencing, lighting, handrails, etc.)
- Creating emergency preparedness plans
- Documenting enforcement of community rules
CAI advocates for programs that reward some of these proactive steps with reduced premiums or expanded coverage availability.
3. Working with Fannie Mae and Freddie Mac
As mentioned above, rigid regulations put in place by GSEs may prevent otherwise financially stable communities from getting key financing. CAI is in active dialogue with Fannie Mae and Freddie Mac to review and potentially revise their insurance coverage requirements. The aim is to strike a realistic balance of protection and cost—ensuring homeowners are protected without putting undue strain on community associations, while also being mindful of the financial obligations of the GSE.
More flexibility in policy regulations would empower more associations to meet financing standards.
4. Expanding Access to State Fair Plans
CAI is also pushing for broader access to State Fair Plans. These are state-created insurance programs designed to serve properties that cannot obtain coverage in the private market, often due to being in high-risk areas (i.e areas prone to wildfires or hurricanes). These types of policies are typically geared toward individual homeowners; however, CAI is advocating that community associations be allowed to access these plans to fill in coverage gaps.
How Blue Lime Can Help
As a company focused on providing insurance solutions for HOAs, Blue Lime recognizes that the current environment may not allow for a traditional approach. Our team is here to help you understand your options and find the right coverage for your association.
Blue Lime can help you with:
- Customized risk assessments, to identify specific vulnerabilities within your community.
- Policy interpretation, to help you understand your coverage and highlight potential gaps
- Market education, so you can know the insurance climate in your area and find companies that will fit your association’s unique needs
- A strategic approach that includes keeping you informed on the latest legislative developments so you can respond quickly and appropriately
At the end of the day, we are a partner our clients can trust, and we help associations navigate the ins and outs of HOA insurance with confidence.
Looking Ahead
The insurance crisis is not going away anytime soon. If anything, environmental and political changes will continue to test the resilience of the insurance industry and the communities it serves. However, with innovative thinking, collaboration, and advocacy, there are paths forward.
Blue Lime offers clear guidance and steadfast support to HOAs during uncertain times, putting our years of experience and broad industry expertise to work for our clients. The challenges are real, but so is our commitment to making this complex industry better for everyone involved.
Let us help you find the best solution for your HOA. Contact us today!
