Written by Nicole Hernandez, featured in the CAI-RMC 2020 Vol.3 Magazine- “Ethics & Insurance”
Insurance is a necessary evil.
Community Associations must carry it to comply with their Governing Documents and State Statutes, sometimes spending the majority of their operating budget on it, while hoping they have the right coverages and limits in place when a problem arises.
To best help your Community Association, and look like a Rock Star in the process, check out the tips below:
Obtaining Multiple Bids
It seems to be the standard – obtain three bids. However, this does not necessarily mean you need to reach out to three agents to shop for your insurance renewal. If you approach an independent agent/broker, they will likely approach multiple markets on the association’s behalf, so it is not unreasonable to look to one agent to help meet this expectation. If the agent selected only provides one bid, they should be able to explain why that was the case (an open claim, loss history, or some other reasons the insurance markets shied away from quoting).
We live in an instant society – we are programed to click a link and receive a product, but this is not how insurance works, especially for a community association. If an agent can provide an immediate quote for your HOA–RUN! Multiple lines are required to cover your community against common exposures and, although many insurance requirements are similar, coverage details can be very different and can direct what market will provide the most robust and competitive coverage. The physical property at the community (including outdoor property- mail kiosks, fences, light poles, etc…) matters. What the Covenants say matters. The location matters. This analysis takes time. Reach out to your selected agent as early as possible so they can immediately get to work, but please understand that obtaining a quote can take 3-4 weeks or more.
Community associations are a unique structure and the intricacies of risks and coverage are not found everywhere. CCIOA provide basic requirements for coverage and Governing Documents will typically expand this coverage but, as they say, the devil is in the details. For example, “Blanket” policies are often a requirement yet policy forms can be misleading regarding blanket coverage. Just as it is important to look for Community Managers with knowledge of the industry, you should also have the same expectation for your insurance agent.
The insurance market is certainly not without its fair share of challenges. Hail events, wildfire and other catastrophic losses have led insurers to increase rates as well as implement more strict underwriting. Carriers are looking more closely at guidelines in the community – rental restrictions, rules related to grills (keep them away from the building), maintenance, and reserve funding are all considerations when a carrier is deciding whether to quote a risk. Associations should take this into consideration when updating Rules & Regulations or amending Covenants.
Nicole Hernandez is a specialty insurance professional in the Denver Metro area focused on helping community associations build highly effective risk management programs. With 17 years of HOA management experience, Nicole uses her results-oriented personality to provide knowledge and expertise to her role.