By Kimberly Lilley, CIRMS, CMCA, EBP and Shannon Smith
This article first appeared in the CAI San Diego Chapter’s Community Insider Magazine, Summer 2025 Issue.
While the insurance crisis initially impacted communities in wildfire-prone areas, it has now expanded across multiple states, affecting a vast number of HOAs. We’ve seen insurance premiums increase dramatically since 2021 with some communities losing coverage entirely. Extreme losses since 2017 and the increasing cost of construction both contribute to carriers needing to be highly selective, making it increasingly difficult for HOAs to secure affordable—or any—insurance.
The stakes are higher than ever. Deferred maintenance can directly impact a community’s ability to remain insured. Addressing aging infrastructure has become as important to risk management as financial planning, and failing to act could leave associations in financial and legal jeopardy.
Proactive Steps to Navigate the Insurance Market
One way to mitigate the impact of today’s volatile insurance market is to start the renewal process early. HOAs should begin shopping at least 90 days before renewal to explore options and avoid being left with limited choices. A rushed renewal process can lead to unfavorable terms or coverage gaps.
Beyond insurance renewals, maintenance planning must be treated with the same urgency. With buildings aging rapidly, communities must take a proactive approach to infrastructure upkeep. The days of postponing repairs due to budget constraints are over. Insurers are now closely scrutinizing maintenance records before issuing policies.
Key Areas Insurers Are Examining
Even if governing documents do not require an HOA to maintain certain components, insurers may demand upgrades before issuing a policy. Carriers are paying close attention to:
- Roofs and Siding – Age, materials, and maintenance history
- Electrical Panels and Wiring – Upgrades since the original construction, fire risk mitigation
- Plumbing Systems – Pipe materials and recent replacements
- HVAC Systems – Maintenance schedules, duct cleaning, and energy efficiency
Underwriters are no longer taking an HOA’s word for completed maintenance. They utilize Google Earth, loss control reports, and even real estate listings to evaluate property conditions remotely. HOAs must have well-documented proof of completed projects, including contracts, permits, and payment receipts.
The Cost of Inaction: Funding Strategies for Maintenance
A major hurdle for HOAs is the rising cost of construction, which remains 30%+ higher than pre-2020 levels. Many associations have historically kept assessments low, mistakenly believing it was a benefit to the members, leaving them unprepared for large-scale maintenance projects. This funding gap forces HOAs to consider alternative solutions such as:
- Phased projects to spread costs over multiple years
- HOA loans tailored for capital improvements
- Special assessments when immediate funding is required
- Reserve study updates to ensure long-term financial planning aligns with rising costs
Managing a Successful Maintenance Project
Once funding is secured, proper planning is crucial. HOAs should engage legal counsel to review contracts, ensure clear project scopes, and establish accountability measures. Additionally, hiring a construction management firm can safeguard the HOA’s interests by verifying work quality and compliance with specifications.
Tracking warranties and maintaining them properly are essential for protecting property improvements and securing communities. Without diligent oversight, warranties can become void due to improper maintenance or contractor errors, leaving HOAs vulnerable to unexpected repair costs. By documenting all completed work and implementing a structured annual maintenance schedule, communities can ensure warranty compliance, extend the lifespan of critical components, and provide proof of completed work for insurance providers.
The Bigger Picture: Safety and Long-Term Value
Proactive maintenance not only helps secure insurance coverage but also enhances community safety and property value. Structural failures, electrical hazards, and outdated systems pose risks that extend beyond financial concerns. While cost management is essential, HOAs should recognize that proper upkeep is not just about insurance—it’s about protecting lives and ensuring long-term stability.
As the insurance market continues to evolve, HOAs must shift their mindset from reactive problem-solving to proactive risk management. Those who embrace this approach will not only open up insurance options but also create safer, more resilient communities for the future.
Kimberly Lilley, CIRMS, CMCA, EBP, is the Director of Advocacy, PR & Marketing for Berg Insurance Agency in partnership with LaBarre/Oksnee and can be reached at [email protected].
Shannon Smith is CEO and Co-Founder for AD Magellan and can be reached at [email protected].