Washington bill directs insurance study to boost affordable condo construction

In a pivotal meeting held on March 19, 2025, the Senate Business, Financial Services & Trade Committee convened to address pressing issues surrounding condominium development in Washington State. The discussion centered on a proposed bill aimed at studying insurance options for developers of permanently affordable homeownership units, a crucial step in alleviating the ongoing housing crisis.

As the meeting unfolded, lawmakers highlighted the challenges faced by condominium developers, particularly the high standards of implied warranties mandated by the Washington Condominium Act. These warranties, which ensure quality construction, have led to increased liability insurance costs, making it difficult for developers to enter the market. A 2022 Department of Commerce study revealed that the availability of defect liability insurance is limited, contributing to a slowdown in new condominium projects.

The proposed bill tasks the Office of the Insurance Commissioner (OIC) with conducting a comprehensive study to explore alternative insurance coverage options. This initiative aims to reduce costs associated with construction defect liability while ensuring that developers maintain access to necessary insurance. The OIC is expected to consult with various stakeholders and provide a report to the legislature by December 2026, outlining recommendations for improving the situation.

Senator Wilson raised concerns about the definition of "permanently affordable homeownership units," which the bill defines as housing restricted to individuals within certain income limits and sponsored by nonprofit organizations or government entities. These units are designed to provide opportunities for first-time buyers and seniors looking to downsize, addressing a significant gap in the housing market.

Representative Natasha Hill, who also spoke at the meeting, emphasized the importance of the study in helping developers navigate the complexities of insurance costs. She noted that condominiums offer unique housing solutions that differ from traditional apartments and single-family homes, making them essential in the fight against the housing crisis.

As the committee deliberated, it became clear that the outcome of this study could have far-reaching implications for the future of affordable housing in Washington. By addressing the insurance barriers that currently hinder condominium development, lawmakers hope to foster a more robust housing market that meets the diverse needs of residents across the state.