Wind and Hail master insurance premium

Started by MichaelS56 • 10 replies • 375 views

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MichaelS56 (Minnesota)
Posts: 858

Posted:

As the Association Master insurance rates have risen quickly, Boards are looking for ways to keep the Association Master insurance premium affordable, while insurance companies are looking for ways to pass some of the costs for storm-related damage over to the owners. How are you folks who already have this are part of your plan, how are you handling it? Our proposal is a 2% plan.

LetA (Nevada)
Posts: 2,679

Posted:

Quote:

Posted By MichaelS56 on 04/10/2024 11:38 AM
As the Association Master insurance rates have risen quickly, Boards are looking for ways to keep the Association Master insurance premium affordable, while insurance companies are looking for ways to pass some of the costs for storm-related damage over to the owners. How are you folks who already have this are part of your plan, how are you handling it? Our proposal is a 2% plan.

That's the sad part about our current political climate. Inflation and legislation, lack and no, has everything going through the roof.

Ever since the hurricanes in FL 2005, One prominent insurance carrier will not insure homes in FL with hurricane damage.
Insurance carriers in California are bailing because of fire damage due to California's lack of proper forestry management.

Unfortunately you are going to have to look at the how much the last hail damage cost and what a total replacement cost. Use those
numbers to raise assessments and put that money in a CD now while rates are high. Honestly home and condo owners are probably going
to have to go solo on these repair damages until the current state of affairs stabilizes.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By MichaelS56 on 04/10/2024 11:38 AM
Our proposal is a 2% plan.

Is that a 2% deductible?How much is 2% in dollars?

We had to go from $10,000 windstorm/hail deductible to 1%, which turns out to be huge.

SheliaH (Indiana)
Posts: 6,964

Posted:

I’d also do a complete risk assessment for your community – your insurance company may be willing to help you with that. There may be other issues besides wind and hail you need to consider and if you can identify which areas could be more problematic than others, you may be able to find ways to reduce the risk.

You already know how important it’s become to keep reserves funded (and if not, get a reserve study, if you haven’t already). If you have one that was completed within the last five years or so, take a look at the more expensive areas like roofing and consider what kind of weather you’ve had during the same time and what you can do to ensure they last as long as you can.

For example, you can’t do anything about what Mother Nature throws at you, but perhaps it’s time to take a good look at the trees. Do you have any who are approaching the end of their life and need to be cut down, lest they land on a building during a storm? How about sewer line disruption – maybe a few of those trees need to come down to reduce that risk (tree roots are twice as long as the tree is tall and they’re always growing)

Is the community vulnerable to flooding? You might not be in a flood plain, but streets can flood too - maybe you need a maintenance plan where the sewer caps are reviewed regularly to remove leaves that may clog up the thing. Homeowners can help with that by making sure they aren't littering to the point paper and whatnot is also clogging the drains - if everyone would pick up a little litter, that could go a long way towards reducing that risk. Homeowners should also consider getting water and sewer line disruption damage to protect themselves.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

LoriM15 (Florida)
Posts: 1,009

Posted:

We met with our insurance broker to try and lower our coverage on some common elements, because it became clear with our claim for Hurricane Ian that the insurance companies would find an excuse not to cover them, no matter what. For example, we had wind driven rain get into some of the parts for our gates and our swimming pool equipment. We did not have flooding in our area. But the insurance company insisted they did not cover flooding and there was no way they got wet any other way. We wanted to drop tree replacement coverage (they wouldn't pay) and hurricane debris coverage (they wouldn't pay) plus coverage for outbuildings like pool cabanas (they wouldn't pay).

There are several adjusments to removed wind coverage from our policy for some areas that could save us money.

Howver, our broker pointed out that the language in our documents, similar to other communities, does not allow us to lower coverage. We are getting an opinion from our attorney to see if we need to amend our documents.

15.1 Common Areas. The Master Association shall purchase and maintain a policy of property insurance covering all the Common Areas (except land, foundation, excavation and other items normally excluded from coverage) and any common personal property and supplies owned by the Master Association. This insurance policy shall afford protection against loss or damage by fire and other perils normally covered by a standard extended coverage endorsement, as well as all other perils which are customarily covered with respect to projects similar in construction, location and use, including all perils normally covered by the standard “all risk” endorsement, where such is available. This policy shall be in an amount equal to one hundred percent (100%) of current replacement cost of the Common Areas, exclusive of land, foundation, excavation and other items normally excluded from coverage, less commercially reasonable deductibles, as determined by the Board. The policies may not be cancelled or substantially modified without at least ten (10) days’ prior written notice to the Master Association. The Master Association shall also obtain, if available, the following special endorsements: “Agreed Amount” and “Inflation Guard Endorsement.”

MelissaP1 (Alabama)
Posts: 13,836

Posted:

we have to have a million dollar policy per our documents. The choicest you have is to make different payment plans. Raise your deductible. Raise your dues to pay for the extra expense. Your HOA needs the insurance and is most likely not insured enough. A million dollars does NOT mean a million dollar pay out. After legal expenses the most a lawsuit pays out is $80K. The HOA would be on the hook for any difference owed.

We found out our clubhouse was insured for only 80K for replacement. Today's prices easily would need $150 K to rebuild a minimum 2 bathroom/kitchen/living room building.

It will be best for everyone to just suck it up and realize insurance costs money. Do a good overall assessment of the common area. Make sure your not getting tricked into taking care of people's personal property. Like if a tree falls down on a house, it does not mean the HOA insurance covers that damage. The HOA covers the tree and if it damages the common area. A house isn't common area... That is an example scenerio as each situation is different. Don't go looking for extra you don't really need.

Plus many insurance companies bundle insurance for HOA's. So it's not always pick and choose what you need. We did not have a company car but our insurance included it. Just meant that if I had an addident as President doing HOA duties that I could make a claim. Rare but it could happen.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

First thing I would look at is raising deductibles to try and hold cost down.

JeffT2 (Iowa)
Posts: 880

Posted:

Ask your agent or look at your insurance policy to see the replacement cost of your building(s) and then calculate 2% of that. Depending on the building, it may exceed the limit in your CC&Rs. If the building is simple clubhouse worth $100,000 to replace, then 2% is just $2,000, and you can probably live with that. On the other hand, an apartment-style condominium building may be worth say $3,000,000, so 2% is $60,000, which may not be acceptable.

What is it that you are insuring?

Have you checked the insusrnace requirements in your CC&Rs?

MichaelS56 (Minnesota)
Posts: 858

Posted:

I spoke with my insurance agent, and he informed me that the 2% wind/hail deductible is per building. The insurance company knows how much they value each of our buildings and from that they will assess the 2% of that value. It will be the responsibility of the Board and or Management company to assess the owners for the money.

LoriM15 (Florida)
Posts: 1,009

Posted:

You have a right to see the appraisal that is done (usually every couple of years) of your HOA property. Once you see what value they place on the buildings, why not put a line item in your reserves for "insurance deductible" and start reserving money? That way you will not have to do a special assessment any time there is damage to the buildings or, if the damage is below the deductible, you will have the money for repairs.

It's always good to look at the appraisal anyway. Our last one, done just before Hurricane Ian, was wrong. They said we have a boardwalk area - we do not. They didn't include our pool cabanas or had them in the wrong area, which caused us a lot of money when they refused to pay for them. The list goes on. It was very sloppy work.

JeffT2 (Iowa)
Posts: 880

Posted:

"guaranteed replacement cost "

We found that we had an endorsement for guaranteed replacement cost that we did not realize we were paying. It is not required in our docs and accounts for over 10% of the premium. In the event of a total loss, it adds additional money for whatever it costs to rebuild, even if that is more than the policy limit (regular replacement cost).

Suppose our area gets hit with a natural disaster (tornado, hurricane, etc.), so we can't get contractors to rebuild, since they are in high demand repairing the widespread damage in the area. So we have to pay them more to rebuild our property. The guaranteed replacement cost will cover it. It will also cover more mundane situations (unpredictable labor and material shortages) where it costs more to rebuild than the policy limit.

Nice to have. Worth it?

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