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Committee backs study to explore insurance options that could unlock permanently affordable condos
Summary
Second substitute House Bill 1516 would direct the Office of the Insurance Commissioner to study insurance coverage options and barriers for permanently affordable homeownership units (condominiums, limited-equity co-ops, CLTs); advocates said insurance premiums have stalled nonprofit development and could approach $1 million per project.
Second substitute House Bill 15-16 would require the Office of the Insurance Commissioner (OIC) to study how permanently affordable homeownership projects can use different insurance approaches to reduce construction-defect liability costs while maintaining consumer protections.
John Kim, committee staff, said the bill directs the OIC to consult with stakeholders, to use findings from past studies, and to contract with actuaries or consultants as needed. The OIC must provide a report to the legislature by December 2026; staff noted a fiscal note and that the OIC estimates regulatory-account expenditures for the study.
Sponsor Representative Natasha Hill said the study is a non-operating-budget way to examine whether insurance solutions could encourage more condo construction and thereby expand permanently affordable homeownership options. “If we can help our builders reduce the cost and find other options that will make insurance more affordable, they’re going to be more willing to build,” Hill said.
Roy Payne Donovan, representing the OIC, said the agency supports the study and is ready to contract for consultants and collect data. Habitat for Humanity’s Ryan Donahue warned that nonprofit projects face extremely high upfront insurance premiums and that reduced insurance barriers could enable more permanently affordable units. “Condo construction insurance costs present an immense barrier to creating permanently affordable homeownership opportunities at greater scale,” Donahue said, adding that premiums for some nonprofit projects can reach roughly $1 million.
Committee members asked whether the study would look at homeowner-association fees and the precise scope (condominium versus other multifamily types). Testifiers and staff said the study focuses on permanently affordable homeownership models such as deed-restricted condos, limited-equity co-ops and community land trusts; staff agreed to provide statutory definitions to the committee.
The committee closed public testimony on HB 15-16; OIC will prepare the legislatively requested report if the bill advances.
