A growing number of Minnesota’s condominium and townhouse communities are seeing sharp increases in property insurance rates, with some rising by as much as 400 percent. These hikes are placing added financial pressure on homeowners and raising concerns among real estate professionals and policymakers.
According to The Minnesota Star Tribune, buildings managed by homeowner associations (HOAs) have been particularly affected by the surge. After years of modest increases, some residents have recently faced abrupt and severe premium hikes with little notice. According to HOA leaders, the shift marks a turning point in what was once a relatively stable cost category for multifamily communities.
Insurance brokers, state lawmakers, and advocacy groups are taking note. Multifamily properties, often considered accessible options for retirees and first-time homebuyers, are becoming less affordable due to rising insurance costs. HOAs previously found cost savings by pooling resources, but that strategy is proving less effective as carriers become more hesitant to insure large-scale properties.
Several factors are contributing to these premium increases. Severe weather events related to climate change, escalating contractor costs, and large legal settlements have all played a role. Although Minnesota’s insurance industry turned a profit in 2024 for the first time in five years, the recovery followed a challenging 2022 when carriers paid out nearly double what they collected in premiums.
Advocates at organizations such as the HOA Leadership Network report that this trend is affecting communities across the state. Insurance coverage is harder to secure, rates are rising rapidly, and coverage terms are being reduced. A recent survey by the group found that property insurance now accounts for 34 percent of the average HOA’s annual budget, up from 27 percent in 2022. This cost increase is often passed directly to homeowners through higher monthly dues.
The Twin Cities metro area alone contains an estimated 197,000 housing units in HOA-managed communities. Statewide, Minnesota ranks 15th in the nation for the number of HOAs, with about 8,000 associations and over 1.5 million residents living in these communities.
Rising insurance costs are having real effects at the neighborhood level. In one Edina HOA, monthly dues increased by more than $250 following a significant policy renewal. The sudden hike led to financial strain for some residents and prompted a rise in property listings. HOA board members were able to switch insurance carriers and save $100,000 annually, but the future remains uncertain.
The Minnesota Legislature is starting to take action. A state working group recently released 41 recommendations focused on governance, financial oversight, and dispute resolution in HOA communities. Some of these proposals address conflicts of interest and management practices that may be contributing to elevated insurance costs.
The Insurance Federation of Minnesota points to another issue: fewer insurance carriers are willing to write policies for multifamily properties. With fewer providers in the market, premiums tend to rise. Legal risks, such as large judgments in premises liability cases, are also pushing insurers out of the space.
Despite some short-term solutions, HOA leaders remain concerned about the long-term outlook. For many Minnesotans, especially younger buyers, high insurance premiums are creating additional obstacles to homeownership.
One HOA board member summed it up: “Property insurance is fundamental to having a home, and it’s fundamental to homeownership affordability.”
Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.