Property Insurance Premiums Skyrocket for Minnesota HOAs
Property insurance costs are increasing rapidly across Minnesota, with homeowner associations (HOAs) bearing the brunt of the price hikes. Some HOAs are reporting increases of up to 400%, forcing difficult choices for residents.
Just after Nancy Brand secured her position on the resident-led board at Edina’s Windwood Condominiums, the property manager delivered disheartening news: after years of single-digit increases, their property insurance rates were set to increase dramatically.
“Our insurance expired at midnight on December 31st,” said Brand, 75. “We found out on the 29th.”
“It was hard to choke down, and we spent a lot of time searching for alternatives,” added Larry Struck, 76, Windwood’s HOA president.
The episode provided Brand and Struck a front-row seat to the volatile property insurance market in Minnesota, which has captured the attention of homeowners, lawmakers, insurance brokers, and real estate agents. The escalating costs are particularly pronounced for buildings managed by HOAs. These communities have seen costs balloon in recent years, with rising insurance premiums a key factor.
Market Pressures and the HOA Response
Insurance agents and brokers attribute the price increases to pressures in the multifamily market, an area often seen as a place for retirees to downsize or allow first-time homebuyers or new homeowners to build equity. In prior years, HOAs could find savings by pooling resources. However, in an environment of increasing property insurance costs, that advantage is diminishing.
At the same time, insurance companies face greater costs as a result of more frequent severe weather events related to climate change, as well as increasing bills from contractors.
In 2024, insurers generated a profit in Minnesota for the first time after five years of losses, according to the Insurance Federation of Minnesota. The peak of claims outstripping premiums was in 2022, when carriers paid $1.92 for every $1 collected.
Lynn Boergerhoff, founder and president of the HOA Leadership Network, a local educational and advocacy group, notes that the property insurance issue is a source of concern among many Twin Cities HOA residents, including those in townhouses and condominiums.
“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.”
The Broad Impact
The HOA Leadership Network estimates there are 3,860 townhouse, condo, and cooperative HOA communities in the seven counties covering the Twin Cities metro area, encompassing 197,000 housing units. Minnesota ranks 15th in the 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.
HOA communities function as hyperlocal governments. Residents volunteer as board members to oversee a property’s management, long-term planning, and local code enforcement. Fees from residents are typically used for a master insurance policy, a reserve fund for infrastructure projects, and day-to-day operational needs.
Mark Foster, vice president of the HOA leadership group, explains that its 1,100 members have seen insurance companies exit the market, last-minute quotes, and astounding premium increases. Windwood Condominiums, for example, experienced a 400% increase in their rates.
“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, who also live in an 84-unit townhouse community in Lakeville, have seen their property insurance increase by 400% in the last five years. Boergerhoff stated that HOA property insurance made up 34% of the yearly budget in 2024, up from 27% in 2022.
“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-Level Attention and Future Concerns
HOAs are garnering attention in the statehouse. Companion bills in the House and Senate introduced this year have bipartisan support. Some of the proposed changes address loopholes in oversight, which can make multifamily properties more expensive and costly to insure.
Some insurance providers are concerned about self-dealing and inflated contract costs within specific HOA communities, according to Aaron Cocking, president and CEO of the Insurance Federation of Minnesota. He adds that high-dollar court judgments and abuse of the civil legal system are also contributing to increasing rates. Some insurers are pulling out of Minnesota completely.
“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.
Following Windwood’s insurance difficulties, monthly dues increased overnight by an average of $262 for a two-bedroom condo of approximately 1,250 square feet. Brand and Struck noticed an increase in units listed for sale. When Windwood was built in 1972, it was home to two swimming pools, a community library, and a garden with 23 plots.
Struck emphasizes that the affordability of home ownership is at stake.
“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?’”
