Homeowners Association and Condominium Association Insurance in 2023

Condominium association and homeowner association insurance is becoming more difficult in 2023 due to hardening of the insurance market. Insurance company underwriters are taking a closer look at this type of risk as claims are on the rise. Property managers and boards of directors should be prepared to address difficulties at renewal time including restricted coverages, higher deductibles and higher premiums. If you’re association is experiencing some of these difficulties, we would like to offer some tips to navigate this time.

What is the condition of your roof(s)?

One of the most important aspects of your building insurance an underwriter is looking at is the condition of roofing material. Roof claims are often the most prevalent risk to your association and your insurance company. Many insurance companies won’t even consider offering insurance on buildings that have roofs over 15 or 20 years old, and if they do, it may be on a depreciated value basis. This is referred to as “actual cash value” insurance vs. the more comprehensive option of “replacement cost.”

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Roof maintenance plan and budget

Having a formal roof maintenance plan in place is a good sign to an insurance company. This shows an underwriter that good management is in place and taking proactive steps to manage the buildings. Too often it seems as though an association is just waiting on a nice hailstorm to come through for a good insurance claim opportunity. Instead, have a relationship with a reputable local roofing contractor to perform an annual inspection on the roof and set aside funds to properly maintain it.

Consider different deductible options

Especially if the roofs are older on your buildings you may need to be open to different deductible options. Sometimes insurance companies will offer a percentage deductible vs. a flat dollar amount deductible. Or you may consider a higher deductible overall. This can be a good way to keep premiums down and can be manageable as long as you are prepared for the worst-case scenario.

Adequate amount of insurance on your buildings

The physical property of the association is usually the most valuable asset. With rises in material costs and general construction costs over the last several years we find buildings to be under insured. Those who have not looked at the insurance coverage limits in many years are at risk of being under-insured. Policy inflation guards have often not kept up with the actual increase in construction cost.

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Get an updated replacement cost estimate

Do some research on the average and potential cost per square foot in your local area. Have your independent agent provide a copy of a recent replacement cost estimate and make sure the details of the building are accurate. Know what the association is required to insure vs what the individual condo unit owners insure. This should be clearly spelled out in the association bylaws and communicated regularly with the unit owners.

Understand the co-insurance clause on your policy

Read the co-insurance clause in your insurance policy to understand the penalty for having a building under insured.

Blanket limit of insurance

Having a “blanket limit” of insurance is recommended when your association has multiple buildings. This essentially is the sum of all building limits of insurance put together and is able to be applied to any one specific building. It protects against the risk of being under insured on any one particular building.

Liability concerns

Understand the potential risk against lawsuits your association could encounter. A standard condominium association insurance package will contain general liability coverage but there may be uncovered risk you’re not aware of.

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Cyber Liability

Does your association maintain private information of unit owners? Accept credit card or EFT payments?

Workers Compensation

Does your association have any employees or hire independent contractors? Anyone performing work for the association should be verified to have proper insurance coverage in place.

Employment Practices Liability

Lawsuits arising from discrimination, wrongful termination and harassment are on the rise. Typically excluded from standard general liability, you should consider EPLI coverage.

Work with experienced professionals

Ask for some references.

“Cheaper” is often not always better.

Many property managers specialize in HOA and COA operations and are well versed to handle your needs.

Select an insurance agent with experience in this type of insurance. Your agency should have several options to take your association to market.

Briggs Insurance Agency

We can provide solutions for your association. We’re well versed in the HOA/COA insurance market and offer a variety of services:

  • Access to several high-quality insurance companies
  • Replacement cost estimates for your buildings
  • Prompt responses to your certificate of insurance and evidence of insurance request
  • Support through the claim process
  • 70+ years of experience and relationships built in the Northwest Indiana and Chicagoland area