Insurance - do you buy all of this stuff?

I am president of an single family home association in CA that spends $9,000+ annually on insurance yet we don't own any property. We maintain a tiny bit of landscaping on public property, we have committees and enforce CC&Rs. How can I figure out if we really need all this insurance? It would not be a problem for us to pay a five figure or more claim from our savings. We have D&O, liability, workmen's comp, umbrella liability and even common area insurance even thought we don't have common areas.

I understand we need a risk manager. Do you know where I would find one of those? Our management company says its a good idea lots of insurance.

Thanks very much.

Marie

You don't need a risk manager, and IMHO, you have a fool for a management company. Just speaking from experience.

If you have no common area, why do you have paid employees (question based on having workman's comp)?

Do you have amenities?

Every Association has different requirements and every State has different requirements for Associations. We have 2 playgrounds and own the roads/parking areas. We carry General Liability, D&O and Crime (acts as our fidelity bond) insurance.

Even with the pond, that seems high to me. My association pays $1,800 per year for insurance. We are 65 homes, gated, we own the roads, storm sewers, brick wall, retention pond and structures. Our insurance includes D&O, liability, and coverage for repair or replacement of association property, including a hurricane rider.

I'm with Tim, I don't understand why you are paying Workman's comp unless you have employees. If so, what do they do? If you have no common areas, what do your dues pay for?

Insurance companies tend to "bundle" insurance and put in coverage not all applies. You can't necessarily pick out the coverage you want. You can shop around but there are few insurance companies that offer coverages to HOA. Our CC&R dictates we must always carry a 1 million policy at all times and any contractors we hire.

Keep in mind a million dollar policy does not pay out a million dollars if sued. Read the fine details on that. You do need insurance for Board members liability. Otherwise who would run for the position if their personal assets were on the line?

It's good to shop around and then even ask your own insurance company what they cover. That way you know if your paying for insurance you and your neighbors don't need. Flood and earthquake insurance is dictated by other factors. So your HOA may or may not have to carry those.

It appears that it does not meet the definition in CA Davis Stirling. Our attorney is still mulling it over though.

We have a management company who collects our dues and helps us with CC&R enforcement, architectural applications, send out our mailings, etc.

Marie,

you VOLUNTEERED to direct a corporation

this is a business position, NOT a pop contest

have you, as a director, read your 'governing documents ?

do you UNDERSTAND them ?

if no to above, why not ?

do so - learn to do so - or get out of the way

TOUGH LOVE is still LOVE

I like my new nick-name: GRUMPY PitA1

I've never heard an insurance agent try to sell me workman's compensation because I have volunteers.

I'm not sure if it's a legitimate concern or simply the agent trying to sell an upgrade that isn't needed.

Your 'savings' would be the reserve funding necessary to replace common elements as they 'wear out / break down'.

If, as you say, you have no common elements then you should require NO savings.

Your savings, unless dedicated to 'reserve funding' should have been fully TAXABLE.

Since you have no common elements to fund:

? when can the members expect the refund of the excess assessments paid ?

Like I stated before: CLUELESS, but well meaning.

Your intentions would make excellent paving on the road to ....................

My opinion is your HOA is over-insured and paying dearly for it, based on your paragraph.
Above all, talk to an insurance professional and not work through your property manager. Then compare advice.

Our single umbrella policy covers all our amenities for damage + liability for injuries and we add insurance in case of board negligence.

That's true with all contracts.

We just redid our trash/recycling contract and saved over $750 a month.
In fact our current company actually agreed to match the new price simply to keep us as a customer.

Thanks everyone. We have not ever shopped our insurance. Our management company said we should not because "that's the broker's job". The broker is charging us a $200 brokers fee in addition to the $9K insurance. The management company said they would get another quote and came back with "the other broker said he cannot offer a lower price because you are getting a really good deal".

I posted on a local forum site and got bites from several other insurance brokers so we will see. Can I ask, does anyone else pay a broker fee in addition to the insurance fees?

We have no employees. We own no property. We do about $10K per year in landscape maintenance. Again we have never shopped our landscape maintenance in 15 years. We are paying over $2K per year to clean out one drainage ditch. I think we should take a look at this too. Our landscape contractor refuses to itemize with invoices. All we see on the invoice is the charge, not what what work they did for the fee.

Marie

You could simply refuse to do business with him. LOL. Its likely he doesn't want to invoice because your paying top dollar for very little and he doesn't want you to realize it.

Shop around, look for a better deal, you might be surprised.

Hah, I had to actually google that one. It didn't originate with Ronald Reagan. The furthest origins I can find are from the 1800's in Russia. Its an old russian proverb "doveryai, no proveryai" which means "trust, but verify."

What section of your Covenants and Restrictions authorizes such an expenditure?