‘This envelope got me heated’: HOA hikes woman’s insurance by thousands. Will home insurance keep rising?
When Kailani opened up a letter about an insurance increase from her homeowners association (HOA), the nurse wasn’t expecting to see multiple zeroes next to her new premium.
Kailani was shocked to read that the HOA required an extra $6,000 to $10,000 for all the residents of her condo complex, depending on the unit they occupy.
Don't miss
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
'You didn't want to risk it': 80-year-old woman from South Carolina is looking for the safest place for her family's $250,000 savings. Here's Dave Ramsey's response
Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
In her viral TikTok video, she explains that the HOA says the new insurance premium is due to be paid within three months.
“This envelope got me heated,” she captioned her video. But increases like this one are rarely without cause — as homeowners across the country are finding out.
Why this happened
In a follow-up video, Kailani (who does not provide her full name) explains that she and her husband have their own insurance for the interior of the condo. But the HOA covers the insurance for the condo’s exterior and shared spaces.
After a wildfire “eliminated” a town nearby (the location is undisclosed), she says that insurers re-assessed many townhomes and condos in the area. Kailani believes this is the reason for the severe premium increase.
But she’s not alone. One commenter wrote on her viral video: “Our insurance jumped 66% this year.”
Between May 2022 and May 2023, home insurance premiums across the country rose by an average of 21%, according to Policygenius. The insurance company says that the average increase was $244 per year, partially due to an increase in extreme weather, natural disasters, risk elevation and inflation.
Read more: Berkshire icon Charlie Munger believed homeownership is for families who want to live in them — not single people. Here’s how to invest in real estate no matter your marital status
Insurance premiums will keep going up
The premium increases may just keep coming due to the increased number of severe weather events. In 2023 alone, weather and climate disasters cost the U.S. $94.9 billion, according to the National Centers for Environmental Information.
Extreme weather also poses risk to the individual. A 2023 Federal Reserve report shows that 19% of Americans were financially impacted by natural disasters, experiencing property damage, work disruption or income loss, temporary evacuation and long-term displacement from the home.
Soon some folks may be out of an insurance policy and will have to seek coverage elsewhere. CNBC reported that several large insurers have pulled out of states, such as California and Florida, because they can’t keep up with the constant fires or flooding, respectively.
HOA fees are also on the rise
Some commenters told Kailani that she ought to leave the HOA-run building if they’re going to ask for such large increases — even if they are mandated by its insurance company.
“There’s really not an option here,” she says in her follow-up video.
She explains that newer, more affordable homes in her area require an HOA membership. The older homes outside of HOAs tend to either be too expensive or require too much work. She adds that the median home price in her area is over a million dollars.
Over 53% (40 million) of owner-occupied households in the country belong to HOAs, according to HOA-USA, an organization for HOA volunteers.
The average HOA fees come in around $250 per month for a single-family home, according to iProperty Management’s most recent numbers. But 45% of HOA members say their fees increased in the past year, according to a 2023 LendingTree survey.
If you’re looking to buy a home that belongs to an HOA, make sure to talk to your realtor about the fees so that you can budget them into your annual spending. Conducting a background check on your potential HOA and getting a feel for its financial stability and legal history could help you avoid steep fees.
What to read next
Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how
Stop crushing your retirement dreams with wealth-killing costs and headaches — here are 10 'must-haves' when choosing a trading platform (and 1 option that has them all)
Don’t leave your family unprotected — find life insurance coverage up to $2 million with no medical exam or blood test
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.