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Subject: HOA insurance problem
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Author Messages
PamB12
(Illinois)

Posts:5


09/01/2021 4:40 PM  
I am in a condomimium building. The insurance for building doubled in the past year. We weren't given any explanation. So some of us got a quote / proposal from another company. We showed it to the board. They will not accept it . They say that this other insurance company hasn't s3n the loss report for the building. So I talked to the other insurance who gave the quote and they said for the insurance to go up that much , there could be losses that are high in cost. It was advised for us to request from the board, the loss report they refer to. I requested the report saying since the other insurance company has not seen the loss report , they would like to see it and decide if there quote would be correct. I have not heard back from the board and it's been 2 weeks. Do I have the right to get this information from the board? That is my question 😒
AugustinD


Posts:1585


09/01/2021 5:13 PM  
PamB12, I looked at the Illinois Condo Act and the Illinois Nonprofit Corporation Act. See links below. Do a keyword search for "records" of these sites to find the sections that address what records a condo owner is entitled to inspect. So far I do not think the loss report is a record you are allowed to see, at least per the statutes.

Can you quote exactly what your condo's covenants and bylaws say about records inspections?

Usually the easiest way to bring about change of the nature you are proposing is to get a group of people who feel as you do elected to the Board. "Easiest" being relative.

You can also go to a meeting of the board and see if the board will recognize you, so you can speak and ask about this.

Illinois Condo Act
https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2200&ChapterID=62


Illinois Nonprofit Corporation Act
https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=080501050HArt%2E+7&ActID=2280&ChapterID=65&SeqStart=5200000&SeqEnd=6800000
LetA
(Nevada)

Posts:1388


09/01/2021 5:16 PM  
I would say yes you are entitled to see this report. Send a letter in writing to the board and request this information. send the request in writing send it via USPS certified mail with return receipt. Have you discussed this with other owners? What do they say? Find out when the next board meeting is when this new insurance policy is voted on and or ratified into the budget. If enough people show up, may be abel to stop it and get your HOA to change carriers or stay with the same carrie and show cause for not raising the premiums.
BillH10
(Texas)

Posts:768


09/01/2021 6:12 PM  
Pam

I understand your motivation for seeking alternative bids to provide insurance to your association. While your intentions are honorable, there are factors involved with which you may not be familiar:

1. Did you ask the 'other' company to quote like for like? If so, how do you know the quote you requested is for the same coverages your association has in place? Do you have a copy of the ACORD? You may have asked for a quote for Property and Liability Insurance for X number of dollars of coverage or with a deductible of Y dollars or percentage, whereas your association may have Workers Compensation, Directors and Officers, Fidelity, and other coverages in force and higher levels of coverage than you obtained with a smaller deductible. Those factors will affect the premium, as will paying the policy cost in a lump sum as opposed to periodic payments which include interest charges as essentially the insurance company is loaning the association the money.

2. Increases are taking place. We manage condominium associations exclusively in the Dallas area. Our clients are seeing 9% to 15% increases.

3. The Loss Report/Run is a vital piece of information. If the company you spoke did not have it, they could not have provided you with a meaningful quote and should have told you that.

4. Does your association have any open or unsettled claims? If so, now is not the best time to change insurance carriers.

5. As regards your Board and association: are there rules, guidelines, stipulations, etc. in place which state competitive bids must be obtained? If so, were they? That is a reasonable question for your Board.

Your concerns are reasonable and should be addressed. You possibly are feeling 'blown off' by the response you received and I would feel the same.

You certainly should be given an explanation a reasonable person would understand. I have very real heartburn with association boards which do not provide reasonable explanations when asked.
MaxB4


Posts:1210


09/01/2021 6:30 PM  
I will agree with everything Bill has pointed out. In California, we have seen steady increases over the last three years. For those that want earthquake coverage, that have almost doubled in 5 years. Guess everyone is waiting for the "Big One", and then get out of Dodge.

The report you are inquiring about is a Loss Run report. It probably is not going to be part of what can be inspected, primarily many may be of a legal nature, such as an insurance company representing the HOA in a legal matter involving damage or maybe a suit against the Board/Association, or the Association maybe going after a homeowner or maybe a vendor.
PamB12
(Illinois)

Posts:5


09/01/2021 6:44 PM  
The reason we got another quote is because the cost doubled from last year. We got a comparable quote also.it covered alot. When the cost doubled , it was like we were blindsided. And I have thought of the fact why didn't we get any other quotes. That is my question, if there is rights as unit owners to be informed as to why the cost doubled. This is only a 12 unit building. As far as other units know there haven't been big claims in the last year. I have requested the loss run report by email but do not get any replys. I feel like I am asking a reasonable question to the board but get no replies. It doesn't add up is what I believe. I am thinking if taking them to court now
MaxB4


Posts:1210


09/01/2021 6:53 PM  
How comparable was the quote you got versus the one the board already had, that doubled? I am guessing you might be self-managed. How involved is the board? Think they might take the new price and then raise dues to offset the increase. How much work do they put in. What have the increases been over a five-year period?

Think about this also, if self-managed, and you take them to court, you know who will represent them, the insurance company and the rates will escalate again.
PamB12
(Illinois)

Posts:5


09/01/2021 7:16 PM  
I requested the report through email saying that the insurance company needs it to make sure his quote is would be in the ball game. I would think they would be happy to get a lower cost. But they haven't respondedat all. The reason I am asking for it is of cost doubled and we weren't informed. The insurance agent who gave me the quote asked if there was any big damage to the building that had to be paid for. And there hasn't been. He wrote up a very professional quote as he works with commercial policies. Another part of this is that there are at least 5 other owners that would want to get the cost lower. And one day the president of the HOA yelled at a unit owner that" she is a trouble maker and she should drop dead". All because she is one of the owners that would like lower costinsurance. That's why this whole thing seems questionable. 🤔
MaxB4


Posts:1210


09/01/2021 7:25 PM  
What documents did your group give to the quoting company?
PamB12
(Illinois)

Posts:5


09/01/2021 7:35 PM  
We didn't give him any docs because we didn't have any. But now if we could give him the loss run report that would help to make sure he's in the ball game
MaxB4


Posts:1210


09/01/2021 8:06 PM  
Posted By PamB12 on 09/01/2021 7:35 PM
We didn't give him any docs because we didn't have any. But now if we could give him the loss run report that would help to make sure he's in the ball game



I have to question their integrity.

As a management company, I send out for quotes all the time. We have a policy to shop every three years for insurance. I have to obtain Liability, D & O, Fidelity, sometimes an Umbrella policy, worker's comp and maybe earthquake. No wind or flood. I manage 50 account and none have filed a claim in 6 plus years, so no Loss Run report to worry about.

On a new policy, a reputable agency will ask for CCRs and Bylaws and a set of financials. Today, I got an email for one client, and below are the questions asked of me for this client.

A list of the current Board Members
A copy of the current Income Statement
A copy of the current Balance Sheet
A copy of the most recent Reserve Study
Has the Association added any employees?
Does management provide employees to the Association, such as onsite management, maintenance or landscape personnel?
Has the board or management been informed of a matter that may result in a property or liability insurance claim?

The agent should know state codes when putting a quote together. How much insurance per state code or CCRs is required for the HOA, how much theft insurance is required. What type of property is it? Condo, detached homes, what is the HOA responsible for, what are homeowners responsible for?

That's just for starts.
PamB12
(Illinois)

Posts:5


09/01/2021 9:33 PM  
Who's integrity would you question? I was curious. I really feel like I was in over my head when trying to get a quote. But I figured it wouldn't hurt to try. There is a management company also that I gave the quote to. I also emailed them requesting more quotes for lower insurance. Their reply was they can't because of the number of losses on the loss report. But as far as us the unit owners know there hasn't been a big number of losses in the last year.Thata why I'm requesting to see the loss run report. We only have 12 units. I feel like taking them to court with a pro bono attorney because they don't respond to my request to see the loss run report. This whole thing has been going on for the wholeinth if August. If you don't mind what is your advice? If you can't answer that question , I understand
BillH10
(Texas)

Posts:768


09/02/2021 3:53 AM  
After having slept on this, I believe I placed the cart before the horse in my first reply, although my response, and those of Max, identified possible reasons why the quote you obtained from another company may not have been comparable to your increased policy expense.

What I should have suggested is I recommend you and the other owners press your board very hard for an explanation for the increase in the year over year policy expense. It is possible there are very valid reasons for the increase. They include: general rate increases, new types of coverage, increased coverage amounts (perhaps the association was under insured, the replacement cost of the building(s) certainly increased in the last year), changes in how deductibles are calculated, etc. Your board, and the agent used, should be able to explain the reasons for the increase.

The fact the expense doubled does not necessarily mean something inappropriate is taking place, the increase may be completely justified and you and the other owners dodged the bullet of not enough insurance. However, you and the others are paying the bill and have a right to understand the reason(s) for the increase.

I do not recommend you seek other quotes, that is the responsibility of the board. Even if you obtain what appear to be more favorable quotes, you are not empowered to bind the insurance and can do nothing with the information you receive besides present it to the board.

I question the value of the information you received from another agent as he or she did not obtain enough information regarding your association. For example, the Declarations of associations we have seen always state the minimum coverage amounts required for property and liability insurance, and sometimes other types of insurance. If the agent did not ask for the declaration requirements, the quote you received is of little value for comparison purposes.

There is no reason why the board should not provide an explanation for the increase as well as an explanation of what has been done to determine if the coverage requirements can be obtained from another carrier or carriers at lower cost.
CathyA3
(Ohio)

Posts:2393


09/02/2021 5:13 AM  
One obvious reason the board has not responded (beyond maybe "thank you for your comments"): boards typically get multiple quotes for insurance *and* must meet/discuss/vote before any decisions are made.

I agree with others' comments: condo insurance can be pretty obscure depending on the type of insurance you have to carry (all included vs. bare walls in) and even insurance agents have to scratch their heads occasionally. A reputable company will not provide a quote based on minimal information but will ask to see numerous documents, especially your CC&Rs/Declaration which should address the specific types and minimums of insurance required. (They're also careful to make sure they're dealing with a person who can actually insure the property in question, and homeowners who are not on the board can't do this.)

For all you know, your association may have been underinsured previously and made what the current carrier thinks is too many claims - that alone could account for a dramatic increase year over year.

Condo insurance premiums have been going up noticeably for a number of years now. The increase has been fueled in part by the increase in extreme weather events followed by increases in the number of claims.

Boards deal with these increases by:

* Increasing the deductible, which means homeowners' individual policies will have to absorb this additional coverage. There's no free lunch when it comes to insurance.

* Reducing the number of small claims, which often means paying out of pocket for losses that are close to the deductible amount. Excessive numbers of these small claims can cause sharp increases in premiums or loss of insurance altogether. Paying out of pocket means homeowners pay the cost of losses directly vs. indirectly via insurance premiums.

Bottom line: there is no free lunch. That's true for anything, but condos seem to hide the true cost of home ownership by lumping a lot of things into the assessments.
PatJ1
(North Carolina)

Posts:197


09/02/2021 5:39 AM  
I would question the integrity of an insurance agency, or any vendor for that matter, providing community quotes to someone other than the Board or the MC without their permission.

You stated that you "got a quote" from another company. Without them reviewing your governing documents, or receiving a loss run report, they are quoting blindly. Much like a car dealership offering 0% interest until they run all the facts.

Condo HOA Master Policy insurance is specialized and there are limited insurance companies that provide that coverage. You can be even more limited by the construction and age of your building and amenities.

We changed insurance providers yesterday. We looked at our renewal and 2 additional quotes. With our age we are pretty much limited to 3 top insurance companies who will underwrite coverage in our area. We discounted one because the minimum deductible they would write was high.

We did switch after reviewing all coverage and will be saving ourselves 50% in premiums in the upcoming year. We may have a surprise next year at renewal.

If your Board refuses to provide the reasons for their choice, you are able to vote them out at the next annual meeting or pay for legal advise. Don't think you'll find anyone pro bono to review HOA issues.


Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
CathyA3
(Ohio)

Posts:2393


09/02/2021 5:55 AM  
More relevant information when evaluating insurance quotes: the financial soundness of the companies and their histories for settling claims. Do they settle promptly or do they drag their heels? Anyone know who insured the collapsed Surfside condo...?

You get what you pay for. Low premiums mean you're giving up something in exchange - not knowing what that something is can result in painful surprises.

PatJ1
(North Carolina)

Posts:197


09/02/2021 6:08 AM  
Posted By CathyA3 on 09/02/2021 5:55 AM
More relevant information when evaluating insurance quotes: the financial soundness of the companies and their histories for settling claims. Do they settle promptly or do they drag their heels? Anyone know who insured the collapsed Surfside condo...?

You get what you pay for. Low premiums mean you're giving up something in exchange - not knowing what that something is can result in painful surprises.






CathyA3,

In our case we switched from an A+ rated insurance company to an A+ rated insurance company that has been covering HOA's for many years, so not new to the marketplace. We did have to change insurance agents to secure that coverage.

Our Board could not ignore the cost savings and reviewed the coverage carefully. Coverage from the new company was also much better.

Board members are volunteers. Many have no idea what they're doing. Educate them. Don't beat them up.
CathyA3
(Ohio)

Posts:2393


09/02/2021 7:48 AM  
Posted By PatJ1 on 09/02/2021 6:08 AM
Posted By CathyA3 on 09/02/2021 5:55 AM
More relevant information when evaluating insurance quotes: the financial soundness of the companies and their histories for settling claims. Do they settle promptly or do they drag their heels? Anyone know who insured the collapsed Surfside condo...?

You get what you pay for. Low premiums mean you're giving up something in exchange - not knowing what that something is can result in painful surprises.






CathyA3,

In our case we switched from an A+ rated insurance company to an A+ rated insurance company that has been covering HOA's for many years, so not new to the marketplace. We did have to change insurance agents to secure that coverage.

Our Board could not ignore the cost savings and reviewed the coverage carefully. Coverage from the new company was also much better.



Our association also switched a few years ago to different carriers, and price was the main driver. Coverage was pretty much identical, although the new package was provided by two different carriers vs. a single carrier.

We haven't made a claim in the last couple years, so I don't know how that worked out in practice. With multiple carriers it's at least theoretically possible that they could disagree over who should pay for what and that this could delay our receiving payment. The board at the time felt that the reduction in premiums was worth the risk.

With all of the turmoil in the insurance market these days - hurricanes, stronger storms in general, floods where there weren't any before (Tennessee), wildfires, condo collapses - there is a chance that insurers are mis-assessing risks and pricing their policies incorrectly. They try not to do that but nobody has a crystal ball. This can also contribute to what people are seeing when they renew their policies.


JohnC46
(South Carolina)

Posts:11417


09/02/2021 10:35 AM  
In order for any insurance company/agent to properly quote, they would need a copy of the existing policy to serve as a basis for their quote. That way it is apples to apples.
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