AB 1339 is the lifeline affordable housing providers need

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OPINION – Rising insurance costs and lack of coverage is a common headline in California and across the country these days, but the acute challenges for affordable housing—and the state’s most vulnerable residents who live there—have received far less attention. Between 2020 and 2022, insurance costs for California’s affordable housing providers increased by an average of 56%, with some facing hikes as high as 500% between 2022 and 2024. At the same time, coverage options have narrowed, further jeopardizing the long-term viability of these essential homes.

Gov. Gavin Newsom can ensure an important first step toward countering this unsustainable trend by signing AB 1339. This legislation requires the California Department of Insurance to study the availability and affordability of coverage for affordable housing providers, equipping the state with the information needed to craft solutions, protect affordable housing from skyrocketing costs, and keep Californians securely housed.

Unlike market-rate housing, where owners can offset rising costs by raising rents or relying on profit margins, affordable housing providers operate under strict affordability requirements that last at least 55 years. While small annual rent adjustments are allowed, they cannot keep pace with insurance premiums that have doubled, tripled, or even quintupled in just a few years. The result is a mounting financial crisis that threatens providers’ ability to maintain operations, placing tens of thousands of households at risk and undermining billions in state investment.

Headquartered in Chico, the Community Housing Improvement Program (CHIP) has developed and managed thousands of affordable homes across seven rural northern California counties since 1973. The 2018 Camp Fire destroyed one of CHIP’s properties in Paradise, and while it was later rebuilt, the development now only qualifies for coverage through California’s Fair Plan, with premiums consuming two-thirds of the property’s gross income. Today, CHIP faces further renewal challenges as new CalFire maps push premiums higher and force partial non-renewals even for properties in Chico, a mid-sized city of 100,000 people not traditionally viewed as a high wildfire-risk community.

This crisis is not limited to wildfire-prone areas such as Chico and Paradise. Rising insurance costs are also hitting infill urban communities like Los Angeles, where the Little Tokyo Service Center (LTSC) has provided social services and developed affordable housing for more than 45 years. LTSC has built over 1,300 units of multifamily housing across Los Angeles County, with another 360 units under construction. Yet from 2022 to 2023, LTSC’s insurance premiums skyrocketed by more than 300%—despite an extremely low record of claims and its location outside wildfire-prone zones.

A Statewide Threat with Local Consequences

Across California, providers are being forced into short-term coping strategies just to stay afloat—tapping reserves meant for one-time emergencies, delaying critical maintenance, reducing staff or services, or cutting back on insurance coverage altogether. These stopgap measures might buy time, but they deepen long-term vulnerability and leave affordable housing communities one disaster away from catastrophe.

Without intervention, the consequences will ripple across every region of the state, undermining California’s hard-won progress in expanding affordable housing supply.

Other states, including New York and Washington, are already studying the affordability and availability of insurance for affordable housing providers. By gathering data and identifying barriers, they are beginning to shape targeted reforms. California cannot afford to fall behind.

Why AB 1339 Matters

California Assembly Bill 1339, authored by Assemblymember Mark González, takes a concrete, data-driven approach to this challenge. The bill requires the California Department of Insurance to analyze data on insurance costs and coverage for affordable housing providers, assess the barriers they face, and recommend solutions.

This analysis will give policymakers the evidence they need to develop informed strategies—whether regulatory changes, new state-backed insurance tools, or budget actions—to stabilize the market and protect affordable housing providers.

We know solving this crisis will take time. But we also know the first step is clear. AB 1339 won’t fix the problem overnight, but it lays the foundation for durable, statewide solutions. By signing it into law, Gov. Newsom can ensure that California confronts the insurance crisis with facts, not guesswork.

The stakes could not be higher. Without action, skyrocketing premiums and shrinking coverage options will continue to endanger the homes of California’s most vulnerable residents and erode decades of public investment. With AB 1339, California has the chance to safeguard affordable housing, protect its communities, and chart a path toward a more secure future.

Governor Newsom should sign AB 1339 without delay.

Seana O’Shaughnessy is the President and CEO of Community Housing Improvement Program. Erich Nakano is the Director of Special Projects and former Executive Director, Little Tokyo Service Center.