HOAleader.com - Tip of the Week - November 29, 2019
Published: Fri, 11/29/19
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Condo/HOA Wonders If This Insurance Broker is On the Up and Up
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In this week's tip, we discuss whether an insurance broker is fudging the facts a little to keep a community association from shopping around.
An HOAleader.com reader asks, "Our agent told us that if we get other quotes it's unethical and will jeopardize our chances for getting insurance through our current companies. Does anyone know Florida law regarding insurance? I believe our agents are screwing us."
This question actually raises the hackles on Steven R. Braten, a shareholder and head of the firm's community association practice at Rosenbaum PLLC in West Palm Beach, Fla.; he has nearly 25 years' experience representing community associations.
"I can't envision a scenario like that," he says. "When I read this, my immediate reaction was that I was fairly upset about it. I'm not sure what allows the insurance agency industry to operate the way they do, but in Florida, the association is free to obtain insurance estimates through a different broker or agent.
"They have to sign what's called a change of designated agent form or something to that effect," adds Braten. "Until you change your designated agent, another agent isn't able to obtain quotes from insurance carriers. There's a finite universe of carriers that will quote policies, and my understanding is that the agents basically go to the same pool of insurers, with the potential difference in pricing being how much the agent is charging as a commission.
"Also, if the first agent has already obtained quotes from carriers, I don't know that those carriers will provide a quote to another agent after that," he states. "So before you ask your first agent for quotes, you need to evaluate the level of service you're getting from that agent and decide if you're happy with that level of service."
Braten also explains that often associations don't know what's going on behind the scenes with insurers in Florida. "When you get a quote, you don't know the premium being paid to the carrier and what's the commission to the agent," he says. "I have a huge problem with how this works. It's also common for agents to provide renewal quotes within 30 days of renewal. When they do that, you don't have enough time to deal with the issue."
His advice for keeping the playing field level when you procure insurance? "Associations need to be on top of when their policies renew," he says. "They also need to ask their agent to provide estimates of renewals as soon as they can, and they need to get more than one quote in terms of each line of insurance.
"They also need an explanation of the differences among the carriers and the coverage offered," says Braten. "There's what's called admitted and excess surplus line carriers, and they're regulated differently in Florida. I don't think most board members know that."
Check out our new article, https://www.hoaleader.com/members/4021.cfm, to find out the practices in other states and get tips for working wisely with an insurance broker.
Best regards,
Matt Humphrey
President
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