In this week's tip, our experts share the advice they're giving to help their clients stay insured and save money at the same time.
It's not just on the nation's coasts, and it's not just in fire- or hurricane-prone areas. Condos and HOAs everywhere are struggling to insure affordably or at all.
“It's happening, and it's very significant,” says Cary Devorsetz, a partner at Alderman, Devorsetz & Hora PLLC in Washington, D.C., who for nearly 20 years has been representing condos, HOAs, and co-ops in the district.
“We're seeing premium increases,” he says. “We're also seeing carriers demanding a per-unit deductible as opposed to one incident deductible. We're seeing carriers require that especially with associations with a history of property damage claims related to water, which is maybe the most frequent insurance claim under the master policy.”
Here's what Devorsetz means. Let's say your condo, which has a deductible of $25,000, has water damage created by unit A. The damage also spread to units B, C, and D. In that case, the insurer would require your condo association pay the deductible four times, totaling $100,000.
The catch is that in Washington, D.C., where Devorsetz practices, the law limits associations from seeking reimbursement from the unit owner who caused damage for any more than $5,000 of the association's deductible.
Condos and HOAs in the Midwest are facing similar problems, says Harry Styron, a community association attorney at Styron & Shilling in Ozark, Mo., who represents roughly 40 association clients at any given time. “We're seeing challenges with both insurability and increasing premiums,” he says. “Some
condos and HOAs are finding that, because of their loss history, they're being denied renewals and then seeing cost increases of 20 to 200 percent in premiums when they seek coverage from other carriers.”
Likewise, it's a serious problem in
Florida, says Joshua Krut, a partner at Kopelowitz Ostrow Ferguson Weiselberg Gilbert in Fort Lauderdale, Fla., who has 23 years in community association law. “The problem in Florida is that, because the legislature allowed associations to waive reserves until recently, a lot of buildings have fallen into disrepair,” he says. “So the cost of bringing them up to standard is multiplied.
“My understanding is that developers lobbied the legislature for that provision years ago so they could sell condos with low assessments,” explains Krut. “So people think it's not expensive to live in Florida. Today, many people are learning that it's more expensive to live in Florida.”
TALK TO US! We want to hear from you on your insurance challenges. Email us at gabifil@rcn.com to tell us what you've seen in terms of insurance increases. How much have your premiums hiked? Or has your insurer declined to renew, and your increase was a doozy? How have you responded to these challenges?