Insurance Premium Increases Threaten Affordable Housing Stability

The affordable housing market in the U.S. is facing increased financial strain as insurance premiums surge, driven by climate-related risks and a constrained legal environment. As a result, housing providers are seeing premium hikes of 25 percent or more, with many passing these costs onto renters. Nonprofit organizations, responsible for a large portion of affordable housing, are also struggling to maintain services as insurance deductibles rise and coverage becomes more difficult to obtain.

According to a recent survey by the National Leased Housing Association, housing providers are implementing cost-cutting measures, such as increasing deductibles, reducing operating expenses, or raising rent. With a growing number of renters already classified as "rent-burdened," defined as paying more than 30 percent of their income on housing, this situation risks exacerbating homelessness and reducing affordable housing options. Census data shows that 36 percent of U.S. households are renters, and the proportion of cost-burdened renters has grown significantly since 2019.

Efforts are underway to address the affordability crisis, including initiatives by HUD to adjust insurance requirements and rent-setting mechanisms for affordable housing units. However, without broader solutions, the pressure of insurance costs could undermine the future of affordable housing, impacting millions of renters across the country.