Insurance news and information

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If you’re watching your condo association insurance costs these days, you’ve seen the trend. Insurers are passing on higher and higher deductibles to associations – sometimes to the tune of $10,000. And associations are having difficulty adjusting to the higher costs. In fact, associations facing mounting deductibles are often looking for places to transfer that cost. That means some unit owners are now coughing up extra for the additional deductible amounts in the form of higher association fees.

It stands to reason that associations would choose to pass the additional cost on to the owners. Most associations now include insurance costs in association fees. Because much of the liability stems from owner activity, associations feel justified in including the deductible charges in association fees. But some associations are considering passing that cost on only to those owners who receive the insurance benefits paid for by the premiums. While that’s a more just way of handling the situation, it’s unlikely that a smaller group of owners would be able to take on the deductible. Also, the association may have to go through the expensive legal process of assigning negligence to the owners, which may not be successful.

The best solution is to spread the cost among all unit owners. Also, it’s good practice to help your owners understand your basic insurance coverage, what actions or inactions on their part affect rates, and how that affects their costs through higher association fees.

However, not all policies allow condo associations to pass deductibles on to their resident owners. Some grandfathered policies stipulate that condo associations are responsible for both premiums and deductibles. Check the policy language, and also go over your association’s Declarations to determine if passing such costs onto owners is possible. If not, talk with your insurer and see if changes can be made to your Declarations section in order to reduce the condo association’s financial liability.