I worked in the Commercial Dept for one the biggie insurance companies for a while and many of the things I have seen has kept me from ever wanting to buy a condo or live in a PUD (Planned Urban Development).
The most common problem that we received calls about were for plumbing issues; sometimes huge and sometimes minimal.
What condo owners don’t realize often is that even if their unit has sustained a covered loss under the condo’s huge blanket policy, the Board of Directors may not allow it to be passed. It is soley up to the Board on whether or not they even want to submit a claim and many. They are elected members and their word is the “word”. Each claim submitted causes the premium to go up, so the Board is wary of what they submit.
Also, the premium for some of the large HOA’s is in excess of $125,000 a year. The deductible on these large policies can be as high as $25,000. So, for the person who has a fire in their kitchen or a tree smashed their window…the damage has to be over $25k for the policy to even kick in.
Loss Assessment which has been mentioned above is another huge thing that people can face in the HOA situation.
My advice to individuals living within the world of HOA’s is to be insured to the max.
1. Understand and know explicitly the terms under your Association’s blanket policy.
2. Read your CCR’s, because they are the “law” and will override even what your insurance companies claim they will cover. For instance, one HOA we covered had in their CCR’s that they would not cover any damage to roofs, even though we as their insurer would cover roof loss.
3. Make sure you have your own building policy. If your HOA has a $5,000-$25,000 deductible make sure your own personal policy has a deductible that is $500-$1,000. Your own personal policy will cover the remaining deductible from the enormous Association’s one. Also, if your Board decides to not send your claim, which is their right, you won’t be scr*wed.
Another note, most HOA insurance policies…say in the instance you suffered a complete loss of your condo, they would rebuild your walls and stop at the dry wall and put down a slab and cocrete. So cabinets, flooring (Pergo, harwood, etc) would be your responsibilty.
4. Make sure you have “Loss Assessment” coverage. Many insurance companies don’t offer more than $30,00, but that bit could be huge if you are ever faced with that situation.
5. Ofcourse, make sure you have your own personal belongings covered; computers,tv’s, clothing.
I am not advocating one insurance company, but it is so important to understand and to have adequate coverage. Often, people want to save a buck, but skimping on your insurance really isn’t the direction to save money, just ask someone who has been through a really bad HOA loss situation.
Its hard for me to feel bad for people who do get into bad HOA situations, because all the information and resources are available to those who don’t mind spending the hour talking to their insurers.
