By Lawrence Szabo, Esq. | Insurance
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.
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 consider temporarily borrowing funds from reserves, and/or imposing a special assessment on the members. Any such changes must be implemented in accordance with limitations that are imposed by an association’s governing documents and applicable state statutes. Frequently, premiums can be reduced significantly by:
Subscription Required to Continue Reading
Pricing Plans
Become a Member
Personal Monthly
-
Access to over 600 Articles & Case Decisions
-
Access to hundreds of Resources
-
HOA Newsletter
-
Free Copy of HOA LIVING
-
25% OFF Download Forms
-
1 User
Personal
-
Access to over 600 Articles & Case Decisions
-
Access to hundreds of Resources
-
HOA Newsletter
-
Free Copy of HOA LIVING
-
25% OFF Download Forms
-
1 User
Pro
-
Access to over 600 Articles & Case Decisions
-
Access to hundreds of Resources
-
HOA Newsletter
-
Free Copy of HOA LIVING
-
Free Unlimited Access to Download Forms (save $1000s!)
-
Unlimited Personal Support from HOA Attorney
-
1 User
HOA Team
-
Access to over 600 Articles & Case Decisions
-
Access to hundreds of Resources
-
HOA Newsletter
-
Free Copy of HOA LIVING
-
Free Unlimited Access to Download Forms (save $1000s!)
-
Unlimited Personal Support from HOA Attorney
-
Up to 10 Users