T.M. from Placer County, California writes:
Dear Mister Condo,
Our condo association is made up of a mix of stand-alone units, duplexes, fourplexes and an eight-plex. Ours is a stand-alone unit. We try to keep our own insurance up to date as building costs rise but feel the association is WAY underinsured as a whole. The complex is in a wooded area and a fire is a real possibility and would surely result in the complete loss of all the units. But because it’s a condo and technically we only own from the paint in we feel we would be at the mercy of the HOA and their inadequate policy to even start the rebuild process. Our unit generates nearly six figure income for us and while we carry insurance to cover that loss it has its limits. Is there any way an individual unit owner can better protect themselves against a weak HOA policy?
Mister Condo replies:
T.M., in my experience, many condominium associations are underinsured. That being said, only an insurance professional can give a more complete answer as to the reason why other than the association isn’t planning on ever needing to file a catastrophic claim and the sweetness of low premiums outweighs the pain of increased costs from increased coverage. I find it unlikely that you could insure the association’s property on your own but I’ll bet you can get some extra insurance on your rental property as an insured business. You should talk to your insurance agent about the feasibility and cost to do so. The Community Association Institute designates certain insurance experts as Certified Insurance and Risk Management Specialists (CIRM, for short). Speaking with A CIRM would be good advice for the Board as they are the ones who decide on the insurance coverage for the condominium Master Policy. All the best!