To end homelessness, political leaders across the country 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.
Housing providers say this new reality is throwing into question the very idea of whether supportive housing can continue to be a solution to homelessness.
Two years ago, Solomon Bukenya’s hands were so swollen, he could hardly move his fingers. So, one day, when he was alone and needed to press a small button on the side of his prosthetic leg to remove it, he said he had no choice but to call 911.
“They came. I told them, I can’t press this button. Please can you press it for me? And that’s all I wanted to do,” he said. “Imagine calling 911 for only that small thing?”
Bukenya, now 65 years old, had been homeless since about 2007, living in cars and on the street. His health was deteriorating.
“I was so weak. My hands, my joints, I couldn’t walk,” he said.
But early last year, he got permanent housing in downtown San Francisco, where he gets free meals and health care.
“I’m feeling [much] stronger,” he said. “I’m like a 20-, 25-year-old, the way I feel in my body.”
Research shows this kind of housing, known in the field as permanent supportive housing, leads not only to positive changes for residents, but to taxpayer savings too.
“It’s so much more affordable in comparison to incarceration or long-term hospitalization or literally the cost of one emergency room visit,” said Travis Hamilton, associate director of housing services for Episcopal Community Services, which owns and operates Bukenya’s building.
The success of this model is a big reason it’s grown. Across the country, the number of these supportive apartments have more than doubled over the past decade — rising to over 660,000 housing units in 2023.
But with the new buildings comes new insurance claims, evidence of which was on display at the apartment complex where Bukenya lives.
“So, unfortunately there’s some water damage, and we do have our elevators out currently,” Hamilton said.
Hamilton said it can take time for people who’ve lived outside for a decade or more to reacclimate to apartment life.
“Folks take medication or feel sleepy, they aren’t feeling well, [they] leave the stove burner on, which can cause fires,” Hamilton said.
It might only be a small stove fire, but water from sprinklers wreaks havoc. And each accident, even minor ones, can cause tens of thousands of dollars in damages, said Beth Stokes, executive director of Episcopal Community Services.
“We’ve had six fires over the past two years alone,” she said. “We have had over seven floods.”
As a result, Stokes said insurance premiums for her organization increased 34% over the past year — a mercy compared to other housing providers who’ve seen premiums more than double, forcing them to dip into operating reserves. Stokes said it’s gotten so bad that insurance costs are now an existential threat.
“Because a lot of us are deeply concerned about what we’re carrying on our books,” she said. “We’re all very concerned about the sustainability of the model.”
Karen Collins, with the American Property Casualty Insurance Association, said the rise in claims for this kind of housing is piling up on top of other challenges in the industry right now, including more natural disasters and higher rebuilding costs.
“All of these combined have resulted in very significant losses in the last few years,” she said. “So, we are seeing premiums have to increase across the entire U.S.”
Unlike other landlords who might pass costs onto tenants, supportive housing providers can’t. Rents are typically capped at 30% of residents’ incomes and subsidized by taxpayers.
State insurance commissions are only just beginning to study this problem. Solutions could include a public backstop — similar to federal flood insurance — or just more funding.
At Episcopal Community Services, Hamilton said they’re already doing what they can by designing buildings with features to prevent damage.
“We learned this from a painful lesson at another permanent supportive housing site that timers on stoves are really important,” he said.
There are extra drains in the bathroom so water doesn’t seep to floors below and monthly house inspections. If it looks like a resident needs help, Hamilton said a staff member will reach out with support, “Hey, what happened? How can we help you prevent these in the future?”
Because, preventing that next fire or flood might mean keeping the doors open.
