Dramatic Insurance Spikes Could Tank California’s Homeless Housing

Here are the morning’s top stories on Tuesday, December 31, 2024…

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• To end homelessness, California’s political leaders have championed a seemingly simple solution: build homes for people who don’t have them. Even better, put those homes in places where unhoused folks are already living — in cities, close to public transportation and services. But insurers are increasingly eyeing those properties as too risky to serve — not because of potentially catastrophic storms or wildfires — but because of who lives there and the urban neighborhoods where they’re located. 
• A new law that goes into effect in the new year could give tenants facing eviction a better shot at staying in their homes.

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Dora Gallo is holding her breath for the next insurance quote. Last year, premiums for the nonprofit she leads, A Community of Friends, rose nearly 200% — from $1.4 million to $3.8 million — to cover its portfolio of 47 properties. Spread across mostly urban neighborhoods in Los Angeles County, the roughly 2,000 apartments are reserved primarily for people exiting homelessness and who have a mental health disability.

A growing number of housing providers across the country are experiencing the same financial pain as A Community of Friends. Organizations that specialize in what’s known as permanent supportive housing — housing that includes support services for people with disabilities or who have been chronically homeless — are reporting dramatic increases in insurance premiums, a reality they say is threatening their ability to continue operating.

Justine Marcus, Northern California policy director for the national nonprofit, Enterprise Community Partners, said that’s especially problematic for California, which, at last count, had more than 181,000 homeless residents and where state officials have made it a priority to place those residents into permanent housing.

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Industry experts say increasing premiums are the result of greater weariness on the part of insurance carriers to take on what they consider to be riskier properties, especially as they also confront higher rebuilding costs, more frequent losses from natural disasters, and other challenges.

Tenant advocates suffered a big defeat this fall when California voters decided against expanding cities’ ability to limit rent increases. But a state law set to take effect Jan. 1 will give renters facing eviction a little more breathing room.