Insurance

We are a 28-unit community with shared walls and our insurance is astronomical. The cost is almost half of our budget. It's not sustainable. Does anyone have any advice regarding our situation? Anyone else have this problem or better yet solutions? Thank you

Debbie,
Cathy makes some very good points, and it would be hard for me to add to it.

Many years ago, when I first was elected to our board in Ca. I asked why we did not go out for bids on our Insurance and just used the same company the PMC recommended. I was quickly told that that company was the Best and that the PMC only uses them for all of their properties. I said that we must still do our duty and get quotes to be sure we were doing our Fiduciary Duty. Well once we approved that we would get 2 other bids the Manager went to the insurance vendor and what do you know our annual rate went from 25K annually down to 15K. We were obviously getting ripped off by the PMC or the carrier. This was for 438 Single Family HOA back in 2008.

Rates are always going to rise and all you can do is shop around to get the best deal.

Which is why having a good insurance broker matters. They do all the heavy lifting. Multiple policies become irrelevant because everything is seamless. In this one particular case, I recommend looking at the list of brokers available from CAI's online directory (https://directory.caionline.org).

Regards,
Steve

We raised our HO-6 deductible to $40,000

Dio,
I have not seen any print talking about a 1,000% insurance increase until you posted this note. That's beyond extreme. Just to verify, your annual insurance premium for a 243 unit condominium (yes?, or are you talking about some other CIC configuration) increased from $40,000 to $425,000 year over year?

Regards,
Steve

Good advice from everyone. I'd expand on Cathy's suggestion about numerous small claims and take a good look at what you filed in the past. You may find there are some underlying causes that need to be addressed. There could also be a misunderstanding of the documents - ours say homeowners are responsible for everything within the unit.

For example,if there's a sewer line disruption from tree roots (and we've had a lot of those), the association will take care of the line from the point it leaves the unit, but the homeowners pay a for the inside clean up and replacement of flooding and whatever else was damaged.

In addition to educating people about the expense and cutting down the trees that caused the trouble, we also explained why the only things that should be flushed down the toilet should be water, pee and...poo. We also encouraged everyone to find their sewer clean out and dump root kill every few months or so and consider sewer backup/water damage coverage on their insurance because that's not always part of a normal homeowners insurance policy.

Back to your claims history - how many resulted from abuse or misuse of the common area? If may be time to institute a few rules, like telling homeowners THEY will be responsible for all costs when this happens.

And after all that, I suspect your assessments will still have to go up because insurance is increasing everywhere. If homeowners squawk, perhaps it's time to look at some of the limited common areas and move that responsibility over to homeowners. That won't be possible with everything and you'll need to amend your documents, which will require homeowner approval. Give them that option and see what happens.

Just to respond to some comments, each unit owner pays for "walls in" insurance, this is a requirement for mortgage companies to protect their asset. Many of us have increased these policies but again, this is to cover everything inside our units and not a replacement cost to rebuild. Our new master policy also includes $5,000,000 per occurrence limited to 10 occurrences per year. So we're paying more for lesser overall value. Again, non-renewals are happening in California and also in Florida and in other states. The policies are as difficult to understand as legal or medical documents.

Sounds like the change to fire risk affected you Diol. Don't know why the O.P's went up

Ours for 200+ Units went from $74,281/ann to $85,642. I don't recall if we raised the deductible or what it is. We, like most high rises, do not have EQ insurance and were not required to get the terrorism/kidnapping coverage, which is offered. We also don't have the car insurance coverage.

Our CC&Rs doesn't require HOA policy to cover anything in the Units beyond the sheetrock. We looked into covering flooring, cabinetry, fixtures & appliances and it was much more expensive.

For a different reason, our 300 balconies were inspected and certified/stamped as safe by an architect. I'd suggested the Board to ask our agent if that would help and he said "maybe;" he'd mention it to the various firms he works with. But, surprisingly to me, it did not help.