How to review your HOA or Condo Association Master Insurance Policy
Posted by Roger Chase
Whether your condo association is looking for a new Master Insurance Policy or reviewing the one in place, here is a list of important points of any master policy that should be reviewed annually.
1. Replacement cost of each building
You must take into consideration the square footage, type of construction, number of stories, year built, or other factors of your HOA property or building. A built in inflation factor to the master insurance policy can elimate some of this but the value should be reviewed every couple of years.
2. Employee Dishonesty Limit
This limit is normally based on the amount of money the condo association has in the bank. The limit should equal to the total value. For instance, if the association has over $1M in the bank, they have a much bigger exposure than condo associations with less money. Either way, it is important to review this value.
3. Directors & Officers Coverage
Believe it or not some condo associations do not have this coverage. The cost is minimal but is very important as it protects the interests of the association board members.
4. Umbrella
This limit of liabilty goes over and above the limits of the other casualty lines of insurance. If there is a pool, roads, play ground equipment, bike trails, etc. then there is a possibility of a claim arising where the underlining limits of their General Liability policy could be exhausted. If that is the case the Umbrella limits (anywhere from $1,000,000 to $25,000,000+) could be purchased to go above and beyond the underlining limits. This could be very important in the event of a big claim arising from a drowning in a pool, and accident with a child on the playground on HOA property. Most of the time a $1M umbrella can be purchased for around $500 a year.
5. Back-up of sewers or drains
This is a very common occurrence with condominium associations and would kick-in in the event of a back up. Normally this coverage is one that needs to be added to the policy with limits of $25,000, $50,000 or $100,000.
6. Earthquake coverage
7. Flood coverage
Are you in a flood zone? If so, work with your agent to make sure you're coverage is complete.
8. Wind coverage
Depending on where your Home Owner Association is located this item is either included or you have to purchase it seperately. If your assocation is located in Florida, Texas, East Coast or West Coast it is likely that you might have to purchase this seperately. When you do this you normally have a seperate deductible (ie. 3%, 5% 10% of total loss) specifically for that coverage. The price for this is normally very high because this pays for damage from wind (ie. hurricanes, etc.). The price for this is often determined by the "Hurricane Forecast".
9. Wind deductible
If you do have a wind deductible please see if it is a per occurrence or per season deductible. This can make a huge difference.
10. Premium
Do you feel you are paying too much for your insurance? If so, check out our Insurance Finder.
11. Your Agent
Are you comfortable with your agent? This is one that is over looked the most. Did you know that you can keep the same company but change agents? This can be done pretty easily without lapse in coverage, without payment interruption, etc., etc. If you believe you agent is not answering your questions or you feel that is not an "expert" and would like an agent that devotes all his time to Condominium and other Habitational insurance then by all means make a change. Some of the money that you pay goes to the agent and if he is not doing a good job or if you feel uncomfortable make a change immediately.
12. Property Deductible
Is your current Master Insurance deductible too low/high? Sometimes you can raise your deductible up to $1,000 or $2,500 and you will notice a significant decrease in your premium.