HOA Insurance Rates Increased by 95% !!

Started by FritzC • 5 replies • 1651 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

FritzC (California)
Posts: 8

Posted:

Hello,

I'm the Vice President of a Small 9-Unit HOA in the Pasadena, California area. I recently received a renewal letter from our insurer showing a 95% increase in our rates since last year. Our rates went from about $3500 to almost $7000 ! I have some questions about this, and I'm hoping someone here may have some insights before I try to get some more details from my insurance broker.

The only explanation from the insurer was in a letter that preceded the renewal letter. Part of that letter stated:

"Your renewal premium will be increased because of the application of schedule and other individual applied rating plans for which you policy qualifies. Based on the information we currently have on file and your expiring exposures, your renewal premium is estimated to increase by more than 25% over last year's premium"

I'm not even sure what 'application of schedule', 'individual applied rating plans' and 'expiring exposures' means. Does anyone have some insight on that?

We did have a single claim against our insurance at the beginning of the year - there was a major wind storm in the area that blew down a tree on one of the units, and knocked down several fences. The insurance company paid our claim of about $14,000.

Is it possible (or legal?) for an insurer to increase rates by such a large amount year over year?

At this rate of increase, we will have paid-back our insurer for the entirety of the claim within 4 years - and continue to pay more after that! Would it be possible to reimburse the insurer $14,000 now from the association funds to restore our original rate?

Thanks all!,

Fritz.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Yep they can increase like that especially after a claim. It sounds like due to a numerous amount of natural disasters in the area your insurer is raising rates. Plus the age of your HOA may play a role. I would consider shopping around for other insurance. Just to get an idea of the increase in context.

Former HOA President

FritzC (California)
Posts: 8

Posted:

Thanks MelissaP1. Even if it isn't a crime, it SHOULD be!

Does anyone reading this post have suggestions on insurance carriers to contact (or to avoid)? Are there carriers that specialize in HOA insurance and have particularly good rates?

BonnieG1 (Nebraska)
Posts: 1,186

Posted:

We were looking for an insurance carrier last year to get a lower rate. We couldn't even find one that would insure our older building without a sprinkler system so we had to stay with our present carrier. Our present carrier to lower our rates a little.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We used Travellor's insurance. There's not a whole lot of insurance companies that cover HOA's. Usually have to get an insurance bundle package if you do get insurance. Our CC&R's dictated the minimum coverage we had to carry. That was a million dollar policy. Our contractors we hired also had to have the same Million dollar coverage. So make sure to check to see what your actually required to cover and raising or lowering your deductibles.

It should be illegal but who's going to enforce it? We had an outbreak of F3 to F5 Tornado's. One left a trail of destruction 100 miles long. We were out of power a week or more. The insurance companies completely dropped home insurances offerings for more than 25% of the owners in the state. Some weren't even in the tornado ravaged areas. Insurance companies are businesses and in it for a profit in the end.

Former HOA President

JM10 (California)
Posts: 503

Posted:

Quote:

Posted By FritzC on 02/18/2013 12:07 PM
Thanks MelissaP1. Even if it isn't a crime, it SHOULD be!

Does anyone reading this post have suggestions on insurance carriers to contact (or to avoid)? Are there carriers that specialize in HOA insurance and have particularly good rates?

I would avoid Farmer's insurance. There is actually a dedicated website called "Farmers Insurance Sucks."

We no longer live in a HOA, but when we took the rogue board to small claims court, the Farmers Insurance adjustor made everything ten times worse. We were in small claims court three times. We won all three times. We were also a small condo complex of only 10 units.

We got a court order to see the insurance policy. Farmers sent forms that only had a list of numbers telling us which policy articles/sections we had subscribed to and not what these actually said. I am pretty sure our HOA didn't specify that we shouldn't be given the full policy. When we asked again, Farmers sent the same thing. When we asked for the actual articles, they said we needed HOA board permission. By that time the HOA refused. Farmers was aware of the court case.

We had to get a lawyer in order to get the full policy. So here's the timeline.

*Farmers notified of court case pending in August 2011.
*Judge tells board to hand over documents in October 2011.
*We receive a list of numbers November 2011.
*We ask Farmers directly for the full policy December 2011.
*Farmers talks to our lawyer who wasn't actually hired for that in March 2012 when the lawyer explains what contempt of court is.
*We get the full policy mid-March 2012.

As part of the October judgment the board was also supposed to meet in mediation. Farmers agent (through Truck) Frank Armstrong told them to refuse but didn't bother to tell us so the mediator attempted to contact the board for about a month or so and sent us a letter telling us that the board refused contact. Our lawyer found out that was on the advice of Frank Armstrong. Again, she had to explain what contempt of court meant and insist that we meet in mediation. We didn't meet in mediation until May and then again in June. Farmers didn't require for the actual board to be there and it should have only taken one session instead of two.

Because of Farmers advice, we had attorney fees we did not count on and should not have had to accrue. The award paid all of our attorney fees and we are guessing the result will be a substantial increase in the insurance rate. The board was doing various illegal things (secret meetings, harassing us by threatening us with fines for things that were not against any rules/CC&R) and the board refused to file state and federal required documents. But we were treated as if we were in the wrong.

On top of the award, Farmers paid for the mediator for two days. This was an award of several tens of thousands so you can probably understand that the code violations weren't small.

I don't know how the board will explain the insurance increase to the remaining members. People believe what they want to believe and this is a cautionary tale to keep informed as a member and don't believe what the board tells you.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here