Rising Insurance Premiums Add New Strain to Homelessness Response Efforts
As homelessness in the United States continues to rise, non-profit housing providers are facing an additional challenge: increasing insurance costs and dwindling coverage options. Kristina Dorer, assistant vice president of property and casualty at Woodruff Sawyer, has witnessed firsthand the shift in the insurance environment for low-income housing. “The insurance market for low-income housing has hardened as carriers tighten coverage due to significant losses,” Dorer explained.
Insurance carriers have become more restrictive due to various factors, including tenant issues, housing quality concerns such as mold, litigation, and state consumer protection laws. Premium hikes are widespread, affecting even properties with no claims history. “For properties with no losses, premiums have increased by 30%-40% (or even more in many cases), and deductibles are much higher,” Dorer noted. “We’ve seen water damage deductibles jump from $10,000 to $100,000.”
The availability of coverage is also shrinking as some insurers exit the low-income housing segment entirely. This leaves non-profits, operating on tight budgets, with fewer choices. Non-profit housing providers are forced into difficult financial decisions when faced with potential claims: “File a claim, risking premium hikes and renewal issues – or pay out of pocket, further impacting their budgets,” according to Dorer.
The impact of these insurance costs extends beyond financial spreadsheets. For non-profits, insurance premium increases often result in service reductions. “Nonprofits can’t increase prices like for-profit businesses to cover added costs,” Dorer said. “A 50% insurance premium increase at renewal often means that much less is available for services to those in need.”
To mitigate risks, non-profits can take several measures. Dorer suggests implementing fire safety equipment like fire blankets, which can be more cost-effective than fire extinguishers in certain situations. Technology, such as humidity sensors, can help monitor building conditions and prevent issues like mold growth. Kitchen fire suppression tools are another risk-control option. Maintaining detailed records of building maintenance and repairs can also influence loss outcomes and insurability.
Building trust with tenants is critical for timely access during emergencies or maintenance checks, which can prevent heavier losses. “Many non-profits emphasize maintaining positive relationships between building management and tenants,” Dorer said. “This leads tenants to have a level of trust to allow unit access when needed.”
While these steps can help, Dorer believes broader policy interventions are necessary to address the underlying challenges. Some states have conducted studies on the insurance difficulties in this space, but little action has been taken. Dorer suggests exploring public support structures, such as grants or alternative insurance programs with sustainable rates for non-profits.
Commercial brokers are now playing a crucial role in both advising clients and advocating for systemic change. “As commercial insurance brokers specializing in non-profits, we’re committed to advocating for affordable insurance solutions to ensure low-income housing remains viable,” Dorer stated.
