The main causes of insurance premium increases; are claims costs, increase in the building replacement limit of insurance or geographically dictated conditions which affect the possibility of damages or claims.
The claims are fairly self-explanatory and affect the policy premium according to their kind, size and frequency in which they occur. Being a fairly broad topic requiring additional considerations, we cover the topic of losses and claims here.
Many policies will carry an inflation guard provision which defines the amount by which the limit of insurance is raised within the period specified, generally at policy renewal. This helps the insurers stay ahead of the rising construction and labor costs and keep the property from being underinsured. Whenever the building replacement cost goes up the policy premium goes up accordingly. In some cases, the insurer can find that these costs went up above what the inflation guard accounts for leaving the building limit of insurance insufficient to cover damages in case of a catastrophic peril such as fire. In that case the insurer can recommend an adequate limit of insurance at policy renewal along with a revised policy premium.
Third most common reason for HOA policy premium increases are the increasingly common and widespread weather anomalies. Over the past years more and more areas are prone to unpredictable and severe weather anomalies such as wildfires in California, baseball size hail storms in parts of Colorado and stretching hurricane season which in 2020 saw a record of 10 named storms bringing the total in damages to a record breaking $26B. This results in a major shift in insurers' evaluation of risks and increasing premiums in areas prone to weather attributed perils.