Condo Association Management Blog

I have lived through a number of earthquakes. Even a minor one can add stress to a structure. Why would you want to cancel earthquake insurance?

Agreed. Even a minor earthquake is stressful to the building and to the occupants. It seems that the owners in one of the two occupied units feel earthquake insurance is a waste of money although it was voted on to keep the earthquake insurance when the previous and now deceased owner was still alive.

Our By-laws state you must have a majority vote either of the Board or of the members present. I am part of a 3-member Board of Trustees; 19 units in the complex. You have only 3 units with 2 surviving members. Are you an Association organized un der the laws of your state? What do your By-laws state regarding decisions and issues?

In these tough economic times, Boards across the country are looking for ways to cut costs and keep assessments low. Insurance coverage is sometimes a target of less informed Boards because it is typically a big ticket item. Ultimately the answer will be in your governing documents, but here are some things to consider. 
 
1) Insurance coverage is typically mandatory for attached multi-family unit complexes and here's why: 
- Coverage protects not only the homeowners, but also the mortgagees. Failure to fully insure could make obtaining or maintaining mortgages difficult if not impossible. 
- An earthquake, were it ever to strike, would affect the building as a whole. This type of coverage is outside the scope of individual HO6 policies. With condos especially, unless the governing documents so provide, you can't insure something you don't own. 
- Earthquake may be considered one of the perils normally covered under a standard "all-risk" endorsement. If your documents require such coverage (and it is typically for no less than 100% of the current replacement value of the condominium property exclusive of land, foundations and footings) then you may be precluded from eliminating such coverage. 
 
2) The homeowner threatening to remove coverage is the President? You may want to warn him/her that the D&O policy does not protect them in cases of illegal activity, in this case action taken without a Board vote or action contrary to a vote of the Board, the Declarations, and the wishes of the membership. 
 
Common Interest living is alien to many people. When you purchase a common interest property you agree to abide by the rules of the community as laid out in the governing documents. If you don't like the rules, you can work to change the documents, but you can not make changes to the Declarations without a vote of the membership. 
 
Good luck. I hope you are able to find an amenable solution without having to resort to a costly legal battle.