The United States is facing an insurance crisis in the housing industry, with acute and unique impacts on the affordable housing sector in California.
An analysis of properties financed with the Low-Income Housing Tax Credit within Enterprise Community Partners' California portfolio found that from 2020-2022 per-unit insurance expenses increased by 56 percent. More recent increases from 2022-2024 are even higher, with organizations reporting increases of 50 to 500 percent.
Our partners also have shared that they are facing limited availability of insurance, significant premium and deductible cost increases, and reductions in the scope and quality of coverage. These issues are present in property, liability, and builder’s risk insurance.
The cost increases and unpredictability are untenable for our industry, especially within the context of rising operational costs more broadly.
At the end of 2023, Jacqueline Waggoner, president of Enterprise's Solutions Division, published an op-ed in the San Francisco Chronicle that elevated this issue, and in 2024, Enterprise is continuing to grow our engagement on this critical issue.
Insurance Increases Impact All Affordable Housing
Media coverage of the insurance crisis in California has primarily focused on climate risks, especially wildfires and floods, as the reasons insurers have stated they are leaving California. Yet affordable housing providers in urbanized communities without significant climate risks are also facing extreme insurance cost increases — particularly housing providers serving the most vulnerable Californians who are exiting homelessness and living in permanent supportive housing.
For example, the provider of an affordable housing development in San Francisco that is home to over 100 families paid about $58,000 for their policy in 2022 and $171,000 this year — nearly a 300% increase. In Los Angeles County, a nonprofit housing provider saw the insurance premium skyrocket from $94,000 to over $519,000 in just one year after opening a new permanent supportive housing community serving over 100 households — a staggering 450% increase, despite filing no insurance claims on this property to date.
Rising insurance costs present an urgent threat to provider's financial sustainability and risk undermining the state’s investments in affordable housing. As prices rise and coverage becomes more limited, affordable housing developers are being forced to consider making difficult and potentially harmful decisions, such as postponing investments in improvements or updates to the building, reducing or eliminating on-site services, or laying off resident services or maintenance staff, that are essential to the residents they serve. Developers also had to consider reducing their insurance coverage to lower this cost — another dangerous trade-off if a claim arises.
Join Our Insurance Working Group
In September 2023, Gov. Gavin Newsom and Insurance Commissioner Ricardo Lara announced an Executive Order and companion regulatory changes to try to address insurance issues. While important, these regulatory actions are unlikely to yield significant relief in the near term for the affordable housing sector.
As Waggoner states in her op-ed, the Legislature and the Governor must consider solutions to this insurance crisis that will "prioritize increased access, lower costs and more equity in how resources are prioritized, and how regulations protect vulnerable Californians.”
Enterprise has begun to convene statewide partners to explore this issue in greater depth and develop policy and programmatic solutions. To share your experience with insurance challenges or to learn more about getting involved in our working group, please contact Shania Santana.
