HOAleader.com - Tip of the Week - December 30, 2022
Published: Fri, 12/30/22
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HOAleader.com - Tip of the Week - December 30, 2022
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In this week's tip, we urge you to take a look at your insurance policies to see if they're weathering today's inflation.
And even if your coverages turn out not be affected by inflation, it's a good time to do an insurance check-in because insurance premiums are going through the roof.
"Associations kind of have to look at this because of what's happening," says Elina Gilbert, a shareholder at Altitude Community Law in Lakewood, Colo., who has specialized in community association law for 22 years and has strong knowledge of the insurance side of the industry. "At least here in Colorado, we're seeing huge jumps in premiums at renewals. Not 20 percent jumps but doubling or even tripling of premiums.
"Some of my communities have no choice but to look at their policies because the hikes are so extreme," she adds. "There are a few insurance brokers I trust who specialize in HOA coverage. I'm always referring boards to those people to see what's out there and what you can get because the increases are crazy right now."
California communities are also seeing major spikes. "I've talked with our insurance industry contacts, and most said yes, premiums are going to go up," notes Suzette Beck, CMCA®, AMS®, the senior vice president of operations of Northern California and Washington for RealManage, a community association management company. "At a minimum, 10 percent is a good factor right now. But I also had one agent come back saying they're no longer giving any projections about how much insurance might go up. The market is too volatile, and there are too many variables."
Beck also suggests working with specific insurance experts. "Getting a very qualified insurance agent is key, and I mean someone experienced with community associations," she advises. "Your agent needs to know how community associations work, how the board works, what the CC&Rs are, and what your CC&Rs require. That will make a huge difference in giving the board a good, strong proposal and advice."
As Beck states, the place to always start is to identify whether your governing documents, in addition to your state statutes, impose insurance duties on your community. "In Colorado, there are certain things associations have to have when it comes to insurance," explains Gilbert. "For instance, they need 100 percent replacement cost coverage, as required by statute."
One big risk with any insurance coverage is that the value of your property may have changed. "I've suggested my clients do this type of checkup from early on in my career, not just in times of inflation," reports Daniel Zimberoff, CCAL, a partner at Zimberoff Deutsch in San Diego, who represents dozens of condo and HOA owners in California at any given time and is the author of Avoiding Homeowner Wars.
"People think you just need to know what the appraised value of the property is," he explains. "No, you need a separate insurance appraisal that addresses the costs to replace the building, such as construction costs. You also need to know all the code enhancement costs versus the property value."
Find out more, plus other coverages you should check out—and why you shouldn't accept "free" coverages—in our new article: https://www.hoaleader.com/members/4631.cfm
Best regards,
Matt Humphrey
President
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