Self-insurance: should you roll the dice?
Photo courtesy of flickr - Last NYC Hero
Homeowner associations are under constant pressure to keep costs down. With the natural disasters that have occurred in the past year or so, the pressure is growing as insurance costs increase and are easily the largest expense in the budget.
Many Condominium and other community associations have considered self-insurance as an option. Self-insurance can reduce an associations’ premium by 20-40%. As good as that sounds, self-insurance should be fully investigated before jumping in.
What is self-insurance?
In a very loose interpretation, self-insurance is a typical property/casualty policy with an extremely high deductible in which the association is responsible for paying claims less than the deductible. State regulations to self insure Condominium, Cooperatives, Homeowners’, and Timeshare associations vary and must be carefully reviewed for your particular state and circumstance.
Those in favor of self-insurance feel that in their particular case the possiblility of a major catastrophe affecting all members of the plan is so remote and unlikely that the benefits outweigh the risks.
Those against self-insurance think that should a catastrophic event occur they would be financially unable to pay the claims in the instance of full replacement coverage.
If you think self-insurance is something to look into, contact an independent agent with access to multiple markets who specializes in insurance for community associations.
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