Property Insurance Increases of 400% Seen at Some Minnesota Condos, HOA Properties
Insurance rates are climbing fast across the state but can be especially pronounced at buildings managed by a homeowner association.
Just after Nancy Brand secured a seat on the board at Edina’s Windwood Condominiums, the property manager revealed some shocking news: after years of single-digit increases, their property insurance rates would increase – by 400%.
“Our insurance expired at midnight on December 31st this year,” said Brand, 75 years old. “We found out on the 29th.”
“It was hard to swallow, and we spent a lot of time searching for alternatives,” added Larry Struck, 76, Windwood’s HOA president.
This experience put Brand and Struck on the front lines of a turbulent property insurance market that has caught the attention of homeowners, lawmakers, insurance brokers, and real estate agents throughout Minnesota. Insurance rates are rising quickly statewide, but the jumps can be particularly notable at buildings managed by a homeowner association (HOA).
Living in HOA communities has become more expensive in recent years, and industry insiders cite rising property insurance costs as a major driver. Insurance agents and brokers say the price pressures are especially strong in the multifamily market, which has long been considered a place for retirees to downsize or for first-time homebuyers to build equity.
In the past, HOA communities could often find cost savings on insurance by pooling resources. However, as the cost of covering large properties has gone up, some HOA community leaders are finding that advantage diminishing.
At the same time, property insurance companies are weathering greater costs due to factors like more frequent severe weather caused by climate change and the increasing expenses from contractors.
In 2024, insurers posted a profit in Minnesota for the first time in five years, according to the Insurance Federation of Minnesota, an industry trade group. The peak of claims outpacing premiums came in 2022, when carriers paid $1.92 for every $1 collected. The subject of property insurance is a major talking point – and a cause for some concern – among many Twin Cities HOA residents, including those in townhouses and condominiums, said Lynn Boergerhoff, founder and president of the locally based educational and advocacy organization HOA Leadership Network.
“In virtually every HOA, we’re hearing the same story,” Boergerhoff said. “It’s either been very difficult to get insurance, or the insurance they are able to get has reduced coverages and increased costs. That’s certainly going on very broadly throughout our metro area.”
‘A whole lot of hand-wringing’
Plenty of Minnesota’s housing is covered by HOA covenants. HOA Leadership Network estimates that in the seven counties covering the Twin Cities metro area, there are 3,860 townhouse, condo, and cooperative HOA communities containing 197,000 housing units. Statewide, Minnesota ranked 15th in total number of HOAs, with 8,000 associations, 1,560,000 residents, and 624,000 units, according to a 2024 study by the Foundation for Community Association Research.
Nationally, an estimated 77.1 million U.S. residents live in some type of homeowner association, and about 33% of the nation’s housing stock is located within one, the study found.
HOA communities function like less-official, hyperlocal governments. Residents volunteer to be board members and oversee a property’s management, long-term planning, and local code enforcement. Fees generated from residents commonly go toward three main uses: a master insurance policy to cover commonly owned property, a reserve fund to plan for major infrastructure projects and emergencies, and day-to-day operational needs like mowing lawns and plowing snow. Mark Foster, vice president of the HOA leadership group, stated that its 1,100 members are dealing with insurance companies vanishing from their market, getting quotes at the last minute, and experiencing shocking premium increases, like the 400% rise at Edina’s Windwood condos.
“That has caused a whole lot of hand-wringing,” Foster said. “Some of our network members have asked the question, ‘Well, can we just divide the property up in fourths and then get different insurance companies to cover those quads?’
“Our lawyers and others in the industry are saying that’s a terrible idea; it might not even be legal. But you can see how creative the thinking becomes when we’re faced with these dilemmas in HOA-land.”
Boergerhoff and Foster both live in an 84-unit townhouse community in Lakeville. Over the past five years, their property insurance has gone up by 400% as well.
Boergerhoff said surveys conducted by his group found that in 2024 an HOA’s property insurance cost made up 34% of the yearly budget on average. In 2022, he said, it took up 27%.
“More than a third of all of the money that comes in to the HOA gets spent on just this single line item,” Boergerhoff said, adding that the “financial burden gets passed directly back on to homeowners” with higher monthly dues.
State Attention, Insurance Pressure
HOAs are beginning to get some attention at the statehouse. A pair of House and Senate companion bills introduced this year have bipartisan support. Last year, state lawmakers established a working group to study HOA issues and come up with solutions. A final report delivered in February made 41 recommendations that touch on board governance, financial interests, and dispute resolution, among other areas.
Some of the proposed changes would target loopholes in oversight and conflicts of interest that can make multifamily properties more expensive and, therefore, more costly to insure. One case profiled by the Minnesota Reformer last year prompted Aaron Cocking, president and CEO of the Insurance Federation of Minnesota, a lobbying group, to call on the Attorney General’s Office to investigate for fraud.
Cocking said insurance providers are concerned about potential self-dealing and inflated contract costs within some HOA communities, which may influence cost increases and policy offerings.
“We all have to pay for it in the form of higher premiums,” he said.
Another area of concern driving higher insurance rates, Cocking said, is the toll of high-dollar court judgments and the potential for abuse of the civil legal system. Risks are rising for multifamily properties, he said, like claims stemming from premises liability. And Cocking said some insurers are quitting Minnesota.
“As we know from Econ 101, the fewer carriers that write [policies] in a space, the higher the price goes, because there’s fewer options,” Cocking said.
Insurers that lose money “year after year after year” cannot stay in that line of business, he said.
A ‘Fundamental’ Need
After Windwood’s insurance debacle, monthly dues went up overnight, by an average of $262 for a two-bedroom condo with roughly 1,250 square feet.
Some residents experienced hardship. The Edina community is home to a range of lifestyles and incomes, from young families with children to snowbirds with a second home.
Brand and Struck, the HOA board members, observed an increase in units going on the market. They also heard their neighbors air grievances. Built in 1972, Windwood sits on roughly 12 acres and spans three main residential buildings. It has two swimming pools – one indoor, one outdoor – a community library, a party room, and a garden with 23 plots.
One of those plots is Brand’s, where she grows tomatoes, green beans, and peppers. She moved into her condo 4½ years ago, days after she retired, looking for a ready-to-go property with no major projects to take on. It quickly felt like home, she said, and getting to know her neighbors “was just the icing on the cake.”
The blowup of the Windwood’s insurance policy in 2024 led board leaders to seek advice and options from their insurance broker. Struck and Brand mentioned that switching carriers this year saved about $100,000 in annual premium costs.
However, concern persists about the future, Struck said, as too few carriers in the market seem to offer the kind of service Windwood needs. He worries about the broader effects on Minnesotans who want to buy a home someday.
“Property insurance is fundamental to having a home, and it’s fundamental to home ownership affordability,” Struck said. “Younger people now, they’re looking at a future where they’re wondering, ‘Will I ever be able to afford to buy a place of my own?’”
