There are two main reasons that your policy premium increases. First, your building structure coverage increases annually because the cost to replace your building (should a catastrophic loss occur) must keep pace with annual price inflation. The cost of building materials as well as labor increase each year and it’s up to the insurance company to keep your building replacement value current. The last thing you want to hear after a catastrophic loss is that the HOA does not have enough insurance coverage to rebuild your structure exactly the way it was to include changes to local building code and ordinances.

The second reason are losses will occur with some policies and premiums must keep pace with the cost to settle these losses in order for an insurance company to remain in business. The Homeowners Association can actively work to mitigate these potential losses through performance of preventive maintenance on plumbing, heating and cooling, clearing the walkways of debris or snow etc. (Hint) Look for an insurance company that encourages these types of activities, their rate of increase will usually be much lower, and the level of coverage much better.