Insurance for our community.

Overpayment is a subjective thing and you should never compare your community to another because you'll usually compare apples to oranges - and besides, you don't live there, so who cares what they do? Insurance and reserves are different issues, so you need to look at them separately.

Let's start with reserves - the question you should be asking is "are we funding reserves properly so we can avoid or at least minimize the need for special assessments and/or loans?" Take a look at your reserve study, which should give you some directions as to how much you need to be setting aside. If you don't have one or the last one was done over 5 years ago, it's past time to get a new one.

Reserves should be keeping up with inflation - how long has your community been putting away $85K a year? Have you factored in inflation - sadly, most people don't, but the fact is, something you brought in 2000 won't cost the same in 2016 - a good reserves study will also factor in inflation.

As far as insurance goes, you may want to have a sit-down with your agent to see what you have vs. what you need. How's your claims history - just like car insurance, premiums can skyrocket or the policy cancelled altogether if you've had too many in a short period of time. This is where it may be helpful to ask the agent for help in developing a risk management plan that will help you identify problem areas and what should be done that can reduce the association's risk.

Or conversely, other communities might be under funding their reserves, not a game I'd want to join. Certainly you should shop for insurance, possibly with the company(ies) that the other communities are using. See if you can get a copy of their declarations page and have the agents compare their coverage to yours and see if you are over covered (or they are under covered, not that they'd want to hear that).

As far as the reserves, nobody here can tell you if the amount is good, this depends on the components the association is responsible for, their age, and possibly other factors. A good reserve study is your best guide for this.

Fred

There would be a couple of ways to determine if the association and its members are overpaying.

Look at your monthly financials, look to see what your NET income for the month and then for the year is. There should be must of a surplus, plus there could be tax consequences for excess income.

Get a hold of your insurance declaration page to see exactly what policies the association has in place. From past experience, you should have windstorm or hurricane insurance.

I would also look at your reserve study, one for the sub association and the one for the master association to see the percentage funded, to see if there is excess funds as you mentioned.

Thanks Richard.
We do have a large surplus in all communities. good idea toreview the declaration pages, which I have.
Appreciate your comments, everyone..
Fred

Fred - does your community have a pool, or other amenities that the other sections do not have?

Fred, there are several factors involved in cost of insurance. I suggest your HOA get quotes from several insurance companies to answer your concerns.

Fred,

The amount placed into Reserves will depend on the number of amenities and common elements your Association is responsible for, the current condition of those items, when you started putting money away for expected repairs/replacements and the number of homes/units that are sharing the cost.

All of those things are taken into consideration with a Reserve Study.

To learn more about Reserve Studies, see the following thread on this forum:

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/103517/view/topic/Default.aspx