Higher Insurance Costs, Lower Coverage Squeeze Co-op and Condo Boards

The blows keep coming for Logan Browne and his neighbors. As president of his condo board in Bushwick, Brooklyn, Browne watched the building's insurance rates triple last year. Then, after the board filed two insurance claims when heavy rainfalls flooded the basement in 2020 and 2023, the insurance carrier declined to renew the policy. When the property manager went shopping for a new insurance carrier, he was repeatedly rebuffed, and the board had to settle for a $15,000 policy, which forced the board to double monthly carrying charges.

“We’re getting to the point where we’re having to make assessments for the building every few months just to keep up the funding,” Browne tells The City. “I hope it doesn’t come to a point where someone can’t afford the assessment.”

Welcome to today's hard insurance market.

Browne is not alone in facing costly insurance increases or insurers declining to renew policies. Across the country, co-op and condo boards and other homeowners have contended with rising premiums, shrinking coverage limits, and a declining number of carriers to choose from. The trend is being pushed by numerous factors: worsening disasters fueled by climate change; increased rates insurance companies have to pay to insure themselves (known as reinsurance); an increase in personal injury claims that win large jury awards; and rising costs related to inflation.

Though the situation in New York City is not as severe as in Florida or California, where insurers have been pulling out following severe hurricanes and wildfires, property owners in the five boroughs have still been feeling the squeeze.

“All of these outside influences are coming together and forcing insurance carriers to be much more selective on who they’re going to insure,” says Sean Kent, senior vice president of insurance at FS Insurance Brokers, an affiliate of property management company FirstService Residential. “We have had a handful of buildings who have really struggled to make ends meet because of the premiums that they’re being forced to pay just to insure their buildings.”

Based on a portfolio of about 600 condos, co-ops and multifamily buildings within New York City, Kent had seen policy increases ranging from 10% to 300% upon renewal, depending on claim history. Nationwide, between 2020 and 2023, apartment buildings saw insurance rates rise by 12.5% annually on average, according to Moody’s. In New York City the picture is even grimmer. For apartment buildings with at least 50 units, average insurance premiums more than doubled in Brooklyn and rose by over 50% in Manhattan and Queens during the same time period, according to information from Yardi Matrix, a real estate data company.

What can co-op and condo boards do to minimize the inevitable pain?

Upgrades like installing new wiring or plumbing, hiring a doorman or putting in a security system can help property owners get more favorable rates, according to the Insurance Information Institute, an industry group. Proactive maintenance of the building's infrastructure, including sidewalks, is advised. And many broker urge boards to pay for minor repairs out of pocket instead of filing an insurance claim, given the weight insurers are putting on claim history.

For co-op and condo boards, in short, it's not getting any easier to navigate today's hard insurance market.