Cohousing-L Mailing List: Post on Insurance from CAI Advocacy Blog for 06/05/2025

[Sharon Villines (sharon]

The latest from CAI on insurance.

Navigating Insurance Pressures in Today’s Condo MarketBy Dawn Bauman, CAE on 
Jun 5, 2025

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 
Surveyreport:
    • 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:

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.

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.

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.

www.caionline.org