Rising Insurance Costs Put California’s Affordable Housing at Risk

Rising Insurance Costs Put California’s Affordable Housing at Risk

Affordable housing providers in California are facing a new crisis that threatens their ability to keep rents low: skyrocketing insurance costs. In some cases, nonprofit housing operators report premium increases of more than 500% in just a few years, pushing already thin budgets to the breaking point.

Why Insurance Matters for Affordable Housing

Affordable housing communities run on tight margins. Rent is capped to remain affordable for low-income tenants, leaving little flexibility when unexpected costs hit. Insurance is a non-negotiable expense—properties must be insured to operate legally and to protect both residents and investors. But when premiums spike, operators are forced to cut elsewhere, often in maintenance, staffing, or future development.

The Impact on Tenants and Communities

When affordable housing providers can’t absorb these rising costs, the burden inevitably falls back on the residents who can least afford it. In extreme cases, projects stall, properties risk foreclosure, or rents edge upward—shrinking California’s already limited affordable housing supply. For low-income families, seniors, and individuals relying on stable rent, this means increased housing insecurity and fewer safe options to call home.

AB 1339: A Lifeline for Housing Providers

To address this challenge, lawmakers introduced AB 1339, a bill designed to help affordable housing providers manage these spiraling insurance premiums. Supporters argue the legislation offers much-needed relief by creating more stability in the insurance market for nonprofit housing developers and operators. Without this support, many fear the state could see projects canceled, stalled, or forced into financial distress.

Why This Matters Now

California already faces a severe housing shortage, with more than 1.3 million affordable units missing to meet demand. Rising insurance costs only deepen the gap by making it harder to keep existing affordable housing stable and by discouraging new development. Protecting providers from crushing premiums is essential to maintaining the progress California has made in expanding housing access.

👉 Read more in Capitol Weekly’s coverage of AB 1339 here: AB 1339 is the lifeline affordable housing providers need