One of the most important decisions a board will make is the purchase of the Association’s insurance policy and program. It is the sole responsibility of the board to ensure the requirements contained within a) the California Civil Code, b) the Association governing document and c) the documents that the lenders holding the first trust deeds have are met or exceeded
The following tips can help make the process of obtaining a quote to cover the Association’s insurance needs easier for your board. Remember to:
- Start early. You should begin at least 90 days prior to the current renewal date.
- Order loss history. Most every insurer requires a current loss history in order to be able to give you a quote. Review the losses for accuracy and provide an explanation for any claim(s). If the Association has taken steps to correct any problem to avoid future loss, share this information with your broker or agent.
- Prepare a data sheet. Know all the details and pertinent information about your Association and create a data sheet for the broker or agent to use. The data sheet should include age, number of buildings or units, roof type, garaging, number of pools and spas, playgrounds, water features, sports courts and so on. Your data sheet should provide your broker with a clear idea of all Association information, so that a complete and accurate quote can be generated.
- Compare insurance companies and coverage. While there are a number of rating agencies that rate insurers based on their financial stability and customer service, AM Best is the most widely recognized. You’ll want to check the ratings to ensure the insurance company has the financial strength to meet their obligation. Additionally, the board should focus on developing a partnership with a long-standing organization committed to insuring common interest developments and not any “fly-by-night” outfit.
- Price should not always be he most important. When purchasing an insurance program to protect the Association’s assets and be in compliance with civil codes and Association documents, your focus should be on the actual insurance protection and coverage offered. While price is important and always a factor, many companies will exclude important coverage to lower their cost. If you cut costs upfront and a loss occurs that isn’t covered, your Association may not be able to ever fully recover.