Co-op and Condo Insurance Forecast: Budget 20% More for 2024

In his company newsletter, Ed Mackoul, president of the insurance brokerage Mackoul Risk Solutions, offers these predictions for the co-op and condo insurance market in 2024:

Property insurance. These premiums will rise for two reasons. First, the cost of materials and labor has increased recently, and therefore the cost to rebuild a building is more than last year — and can be much more. So insurance carriers are increasing building limits, sometimes drastically, to make sure the property is insured to its full value. And second, reinsurance companies have raised their rates. (Reinsurance is insurance for insurance carriers, which can protect them from insolvency in the event of a major disaster, such as a hurricane or building collapse.) Reinsurance, though more expensive, is a good thing because it protects carriers from insolvency. When there are fewer insurance carriers willing to quote, you can almost guarantee that you will pay a higher premium.

General liability insurance. In the current "hard" insurance market, general liability premiums have been rising for the past few years.  Though the price increases appear to have leveled off, that does not mean I would budget a lower amount or even a flat renewal. Carriers continue to tighten their coverage guidelines and are reviewing claims more diligently. 

Commercial umbrella insurance. Commercial umbrellas, which give added coverage to standard policies, were probably the biggest culprit in premium increases in the past few years. Most insureds now have a much lower limit at a much higher premium, sometimes as much as 25%. One of the best things a co-op or condo can do to help their cause is to close out all building violations with the city. Some carriers will deny umbrella coverage if there are ANY open violations! You can check your DOB violations here and HPD violations here. Adding central station alarms or sprinklers, though costly, could reduce your umbrella premium significantly.

Directors & Officers liability insurance. Faced with an uptick in claims over the past few years, D&O carriers, which typically are not very profitable in New York, have been raising their rates by 10-20%.

Crime insurance. You may see a slight increase in your crime insurance premium simply because most limits are based on three months of maintenance fees. As monthly maintenance increases, there will be a parallel increase in premium.

Cyber liability insurance. This is one of the fastest-growing insurance policies. While the premium for a co-op or condo is relatively low, we’re starting to see increases in this area as well. The reason is the rise in social engineering claims, which arise when hackers get into a system and dupe a co-op or condo board into paying them instead of the actual billing entity. Cyber liability carriers that include social engineering in their policies are raising their premiums; companies that don’t include it are allowing insureds to add this coverage for an additional premium. I would budget a 20% increase in this area.

In conclusion, I suggest budgeting a minimum of a 20% increase in your insurance budget for 2024. If the cost comes in less than that, everyone will be happy — and you'll be protected.