Do you have earthquake insurance?

What property does your association own that the insurance would cover?

Beth the HOA is responsible not only the buildings but the infrastructure too. Since you said units and buildings I'm assuming you are a condo so if you don't have private roads, you have parking lots or garages. What about water and sewer, our association is responsible from the city connections to the individual units. Pool, tennis courts, exercise room or clubhouse? You could spend $40,000 in a heartbeat.

Basically you're gambling that nothing major will happen vs paying $40,000 a year to protect the HOA from massive expenditures. We have 132 units which would increase our assessments $25.00 per unit a month to pay for the insurance. How many units do you have? In CA you are held to the 20% cap for raising dues without H/O approval even for insurance so could the BOD do it or would it require a H/O vote?

At the very least it should be put before the H/O do they want to pay X amount of dollars increase each month or face the possibility of massive emergency assessments?

No, Beth, we don't have 'quake ins. We sent a very carefully worded letter & survey to Owners last summer asking their opinion. There were about three options for them to consider. One was just for plate glass eq. ins. (we're a twin-tower high rise). The two others were for the entire structures showing two different size deductibles.

Our response rate was pathetic--about 15%. Only about 8% of that number was interested in our HOA purchasing such insurance.

Our developer, who sits on our Board as a commercial rep, says that none of their many CA HOAs want 'quake ins because of the expense. One reason in our case might be that we aren't in an or near area that has major faults. Meantime, 'quakes are springing up in other areas of the U.S., esp. east TX, I've read.

Suppose you forego the earthquake insurance and the Big One strikes, leaving your condo a pile of rubble. The individual owners who each own an undivided interest in the building are going to want blood from whoever decided to reduce the value of their investments to zero. The board members will be the natural targets.

As a director of your association you have no personal liability provided that you acted as a reasonable and prudent person would in similar circumstances. The question will arise whether you were reasonable and prudent in choosing not to insure against earthquakes.

Whether to insure is a matter of cost versus risk. You already know the cost but you do not know the risk. Making a decision to forego insurance only because of the cost is not prudent.

To cover yourself against personal liability you should probably obtain some expert advice. You need a qualified expert’s opinion regarding your building’s susceptibility to serious earthquake damage. You need to know, among other things, how likely your location is to be hit by a quake and how likely you are to suffer a serious loss. You need a scientific analysis to assess your risks.

The expert is unlikely to advise you whether to purchase insurance. The final decision will be your board’s, but you will be making the decision as a reasonable and prudent person would instead of a making a knee-jerk response to the cost.

Darn lack of edit feature.
My 8th grade English Teacher would be giving me extra homework for that sentence

Right or wrong, as Larry says there will tons of lawyers lined up.

Know the difference between my scumbag lawyer and your scumbag lawyer?

One of the scumabgs is mine.

Beth, we maintained EQ insurance for years but decided to drop it last year. The cost kept going up (it doubled over last 7 years period). The real issue was not so much the payment of premium but the deductible. EQ insurance usually has a deductible wich is a percentage of your total insured value. In our case that deductible spread across all owner came up to about $40,000 per unit. We knew that most owners didn't have their own EQ insurance which would cover part of the deductible and they would not have the money to pay it. With that in mind we decided to cancel our insurance.

Good, Beth. And Jeff's right. Even with high premiums the deductible is huge. You also won't be able to find any "expert" who'll be able to predict when the Big One might hit. But you probably already know that.

When we sent a survey to our members, our PM also contacted about 13 high rises in our general area and the only one that had 'quake ins. had it because it was required by their CC&Rs. All of those towers, like ours, range in age from 2-10 years old and are of concrete & steel construction. Our high rise supposedly would withstand an earthquake up to a magnitude of 8. As I noted earlier, we aren't near major faults.

So, especially if your wood buildings are older and you're near major faults, your risk factors might be kinda high.