Inflation has left its mark across the board, and we are especially seeing it in the automotive industry. The CPI (customer price index) shows that over the last 3 years, there has been a 35% inflation rate for used vehicles and a 22% increase for new vehicles. With numbers like that, a lot of people that are in the market for a new car a looking at ways they can save either in their purchase or through their insurance. This has lead to a lot of questions. We have taken the questions we get most frequently and answered them below.

Do you remember the viral news story of the Homeowners Association (HOA) fees increasing by hundreds of dollars in one local community, and the HOA board claiming it was due to insurance premiums going up? While we cannot speak specifically to that situation, we did want to answer some of your most common questions regarding HOAs and insurance. Q. Why do insurance premiums go up (for HOA’s or in general) Great question. Insurance premiums are based on a number of factors including frequency and cost of claims, property valuations and increased risk due to extreme weather. To further explain, if an organization or individual frequently makes claims to their insurance company, they may become considered “high risk”, meaning it costs the insurance company more to insure them, so to help offset this cost, their premiums increase. Q. If claims make our premiums go up, when should we be filing claims? The pricing of any policy is based on risk. Underwriters look at the frequency and severity of claims. Filing of any claim, even one below the deductible, impacts the carrier because the carrier will need to investigate and determine coverages and damages. Filing a large number of claims may cause your insurance rates to increase or your policy to be non-renewed. Prior to filing a claim, it is best to determine the likelihood of the claim exceeding the deductible and reviewing the number of claims filed in the past. Of course, if a claim is to be filed, it should be done promptly. Q. How do we determine what deductible the HOA should choose? First, understand that a deductible is that amount you have to pay before insurance kicks in and pays. For instance, if the cost to fix something is $1000.00 and you have a $500.00 deductible, you would pay $500.00 and (if you submitted a claim) the insurance company would pay the remaining $500.00. There are three questions you should ask when selecting a deductible: How much can the association afford; How much can be saved per year by raising the deductible; and What alternatives are there to carrying a high deductible? Q. I’m a volunteer board member for my HOA. Do I need insurance? Absolutely. Board members are often asked to make tough and complex decisions for the association. Decisions that may make some HOA members unhappy or angry. Because HOA board members can be held personally liable for their mistakes and their decisions made for the association, they need Directors and Officers Insurance coverage. Normally paid for by the HOA, D&O coverage protects volunteer and paid board members from liability should there be claims against them for their work on behalf of the HOA. Q. How can we get competitive quotes for our HOA Insurance coverage? We are independent agents, and we have access to dozens of insurance carriers. Unlike a captive agent, who represents only one carrier, we can compare several policies saving you time and trouble. Q. What other insurance coverage do HOA’s need? There are several that may be needed, includin g: A. Commercial General Liability/Property Insurance - Liability refers to expenses and damages associated with legal action against the association. For example, if someone is injured on HOA property and decides to sue the HOA. The liability portion of the policy will pay defense costs and covered damages, if awarded. Some policies will include a retention amount, similar to a deductible, which is the HOA’s responsibility. Property damage, on the other hand, refers to physical damages to HOA buildings (that portion owned by the association) and public areas. For example, hail damages the condo exteriors, then the insurance provider will cover the cost of repairs less a deductible. B. Workers’ Compensation and Employee Dishonesty Bonds - Like any other business, if a HOA has employees, workers compensation insurance is necessary to avoid lawsuits should an employee be injured while on the job. Employee dishonesty bonds protect the association from theft and damage of association property by dishonest employees. C. Discrimination Claims Coverage - For associations in the position to foreclose on residents who fail to keep up with their mortgages, discrimination claims coverage is a must. When facing foreclosure, many people look for any way to avoid losing their homes; one of those ways may be filing a discrimination claim. This important home HOA insurance covers associations against this liability in the event they are required to foreclose against a person who is of a minority status, or some other protected individual. Discrimination coverage is becoming more important for HOAs as foreclosure rates continue to climb. D. Social Host Liability Coverage - Some homeowners’ associations have clubhouses and social gathering places where members and other guests can meet for planned events. If alcohol is ever served on association grounds at any of these events, HOAs need social host liability coverage. If the HOA does not permit the serving of liquor in the public areas, this coverage may not be necessary. E. Garage keeper’s Coverage - An association that has a garage where non-members are permitted to park must have garage keeper’s insurance. This insurance protects the HOA and the vehicle owner against vehicle damage or theft while that guest is on the premises and parked in the association’s garage. This is not meant to be an exhaustive list of insurance coverages available or needed by all HOAs. No single policy, or group of policies, can protect against every possible risk. It’s best to discuss your HOA’s specific needs with an independent insurance agent. Call us today.