HOA Financials & Insurance

Sarmad Naqvi

12 Nov 2025 — 2 min read

HOA Financials

How HOAs Can Show Strong Financials to Get the Best Insurance Rates

In today's insurance market, homeowners associations (HOAs) face rising premiums and shrinking appetite among carriers—especially for older or high-rise properties. While many boards focus on maintenance, claims, and risk management, one often-overlooked factor can make or break their insurance options: financial health.

Why Insurers Care About HOA Financials

Insurance carriers view HOAs much like underwriters view individual policyholders—they want to know the insured is financially stable, proactive, and responsible. Reviewing financial statements helps underwriters evaluate the property's long-term viability and its ability to absorb deductibles, fund repairs, and prevent deferred maintenance that can lead to future claims.

Key reasons insurers request HOA financials include:

Assessing Reserve Health: Adequate reserves indicate that the HOA can handle capital repairs (roofs, plumbing, elevators, etc.) without deferring maintenance, reducing the likelihood of future losses.
Evaluating Operating Budgets: A balanced operating budget shows the board manages funds responsibly and can meet regular obligations without dipping into reserves or levying emergency assessments.
Identifying Delinquencies: High delinquency rates can signal financial stress among owners, which increases the risk of unpaid assessments after a large claim or special assessment.
Determining Deductible Readiness: Carriers want to know the HOA can afford to pay its deductibles after a loss, particularly as deductibles for wind, water, or earthquake coverage have grown significantly.

In short, financial transparency builds underwriting confidence. The more stability a board demonstrates, the better the chance of attracting competitive quotes and favorable terms.

What "Strong Financials" Look Like to Insurers

To make a positive impression during underwriting, HOAs should focus on the following key metrics and practices:

Healthy Reserves – Most carriers prefer funding levels of 70% or more, as determined by reserve studies. A well-funded reserve account shows foresight and long-term stewardship.
Low Assessment Delinquencies – Keep delinquency rates under 5% when possible. Implement consistent collection policies and document results.
Clean Financial Statements – Annual reviews or audits by certified public accountants (CPAs) demonstrate professionalism and accuracy.
Stable Operating Budget – Avoid chronic deficits or extensive special assessments. Insurers prefer consistent, predictable operations.
Evidence of Capital Planning – Regular reserve studies, updated at least every three years, signal proactive maintenance planning.

How to Present Financials for Best Results

When your broker markets the insurance program, include:

The most recent audited or reviewed financial statement.
The current reserve study and funding plan.
The budget for the upcoming year.
A statement of financial stability highlighting improvements, capital projects, or new maintenance contracts.

A clean, organized submission package communicates that your board operates transparently and responsibly—key factors that can influence an underwriter's confidence in offering broader coverage or lower premiums.

The Bottom Line

When your finances are strong and you present well to the insurance carrier, you will see better rates in today's insurance world, which can mean the difference between a preferred market policy and a non-standard market policy.

by Sarmad Naqvi, CLCS

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