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Tuesday, September 29, 2020











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Subject: HOA INSURANCE
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Author Messages
DennisG7
(Georgia)

Posts:109


02/05/2020 11:33 AM  
So another question regarding HOA insurance. As the new BOD was looking at our monthly bills from January I came across a couple of insurance policies. One seemed to be an Umbrella Policy another was a General Liability policy. The two were over $6000 which seemed a little high. I called the Insurance company and the agent was not available. I hope to hear from him later today or tomorrow. While on the phone with the office manager she said we actually had a third policy with them. Not sure what it's for.
Is this typical? What should I be looking for?? Appreciate any help or suggestions.
Dennis G7
SheliaH
(Indiana)

Posts:3465


02/05/2020 12:34 PM  
When it comes to insurance (or costs of anything), "high" can be subjective. You may think it seems high, but you can't compare an association's master insurance policy to your individual homeowner's insurance. there's a lot more to cover so the costs are going to be higher, and as you might guess, some companies allow a bigger bang for the buck.

Always begin with your documents - what areas and services are association responsibility vs. the homeowners? You'll be focusing on the areas the association's responsible for, but need to keep the homeowners in mind because they should be encouraged to check their own policies against the master policy to ensure there's no duplication or overlap between the two.

Once you have a handle on what areas should be covered, Google HOA master insurance or something, and read the articles on what's typically covered (pay particular attention to directors and officers {D & O} coverage). That should give you a foundation of what's out there and you may begin to get a better handle on what your community will need.

Since you do have some coverage, but don't know exactly what it does, pull out the polices and read them. All of you. to save a little time, each one can take a section and explain it to the others. Or you can check if there's a local representative of the insurance company. If so, invite him/her to a meeting (or two or three) to review the coverage with you. No, that won't get you out of reading the policies - you may not know everything chapter and verse, but you should know what's covered and for how much, how to file a claim and perhaps, how the insurance company will handle legal action against the association for things like slip and fall.

While you have the insurance representative, discuss your current coverage and what the association can do to reduce its risk in certain areas - a risk analysis might be appropriate and worth the cost, or you may be able to do your own. The company, along with your association attorney may be able to help you draft policies and procedures

There's probably more you need to do - I often recommend taking a look at the education materials on the Community Associaiton institute website, as there are lots of low-cost brochures and books on a variety of HOA topics ranging from insurance to reserves. Most are written in plain English, and you can get lots of good information on best practices you could consider adapting to your communities
RogerJ1
(Texas)

Posts:103


02/05/2020 5:16 PM  
Posted By DennisG7 on 02/05/2020 11:33 AM
So another question regarding HOA insurance. As the new BOD was looking at our monthly bills from January I came across a couple of insurance policies. One seemed to be an Umbrella Policy another was a General Liability policy. The two were over $6000 which seemed a little high. I called the Insurance company and the agent was not available. I hope to hear from him later today or tomorrow. While on the phone with the office manager she said we actually had a third policy with them. Not sure what it's for.
Is this typical? What should I be looking for?? Appreciate any help or suggestions.
Dennis G7




The third policy is probably Directors and Officers Liability/Indemnity insurance.
SteveM9
(Massachusetts)

Posts:3599


02/06/2020 7:58 AM  
The two were over $6000 which seemed a little high.




Well, without any competitive quotes from other insurance companies, how would you know it was high? Could be low, middle or high. You need to get quotes from other insurance companies.
BarbaraT1
(Texas)

Posts:349


02/06/2020 2:01 PM  
Whenever a board member or homeowner says "that seems high" I ask "what is the basis for that reasoning"?

Are you familiar with the market? Do you have subject matter knowledge? Or do you just not like the number?

The cost of your premium depends on: What is being covered, how old it is, how its valuation is determined, how high your deductible is, is there a buy down, your claims history, risk factors based on age and geographic location.

If you haven't shopped it in a few years, do so.
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