Paying for Huge Increases in HOA Insurance Premiums

With the extremes in weather that Americans have experienced over the last few years, property damage insurance claims have caused a crisis in the insurance industry that writes insurance policies covering homeowners’ associations. The problem is compounded by state regulations that may impose limitations on the amounts a carrier can charge for insurance premiums. As a result, many insurance companies have discontinued writing policies for homeowners’ associations that are located in what the carriers deem “high-risk” areas, and such associations are forced to seek coverage from non-admitted insurance carriers that sell insurance in the less regulated “surplus” market where policies can be sold at significantly higher cost to the association.

Meet Coverwatch

HOA Member Services is proud to work with Coverwatch, a nationwide commercial insurance brokerage led by former HOA directors who understand these challenges from the board’s side. Coverwatch helps associations evaluate existing coverage, compare available insurance markets, and identify opportunities for stronger coverage or lower costs.

A free Coverwatch review may help your association:

• Compare its current policies, coverage and pricing.
• Identify potentially inadequate limits, exclusions or coverage gaps.
• Explore options available through multiple insurance markets.
• Determine whether stronger coverage or meaningful savings may be available.
• Receive a clear side-by-side explanation the board can understand.

Because state laws and/or association’s governing documents require homeowners’ associations to carry insurance and may impose specific requirements on the amount of coverage the association must have, a failure to obtain the required coverage exposes the association and the directors to liability for failure to obtain adequate insurance coverage. Thus, when association boards of directors encounter unexpected significant increases in insurance premiums that have not been budgeted for and which create large operating deficits, the associations must come up with solutions for funding these unexpected expenses that were not provided for in approved budgets.

To fund the unanticipated cost of required insurance, associations can: