HOMEOWNERS ASSOCIATIONS SHOULD PLAN FOR SUBSTANTIAL INCREASES IN THE COST OF INSURANCE

Homeowners associations (HOAs) should expect substantial increases in their insurance premiums due to the recent wildfires, especially in states like California, Oregon, and Colorado, where wildfire risks are high. HOA insurance premiums are rapidly rising because: (i) severe wildfires have occurred more frequently, leading to larger payouts; (ii) some insurance carriers have stopped writing policies in wildfire-prone areas, forcing HOAs to seek coverage from fewer carriers, often at much higher rates; (iii) the cost for insurers to get their own coverage (reinsurance) has surged, leading to higher premiums for policyholders, including HOAs; and (iii) insurers are demanding better fire mitigation measures, and HOAs that don’t comply may face even steeper increases or non-renewals.

HOAs are advised to plan for substantial increases in the cost of their insurance coverage and should be proactive in preparing for the renewal of their policies by taking the following actions:

1. Improve Fire & Disaster Mitigation.

Since wildfire and disaster risks drive up premiums, HOAs should take action to reduce risk:

• Create Defensible Space – Remove dry vegetation, trim trees, and maintain a firebreak around structures.
• Upgrade to Fire-Resistant Materials – Use fire-resistant roofing, siding, and landscaping materials.
• Install Fire Suppression Systems – Ensure sprinkler systems, fire hydrants, and extinguishers are in place and functional.
• Implement a Wildfire Preparedness Plan – Some insurers offer discounts for HOAs with formal fire mitigation policies.

2. Increase Security & Safety Measures.

• Improve Lighting & Surveillance – Well-lit common areas and security cameras can deter crime, reducing liability risks.
• Maintain Walkways & Common Areas – Prevent trip-and-fall hazards by fixing uneven sidewalks and repairing common areas.
• Enforce Pool & Playground Safety – Ensure fencing, non-slip surfaces, and signage meet safety standards.