Where Does Your HOA Stand? Insurance Premiums and Changing Coverage

Every month, HOA residents pay monthly fees that are in turn used to pay for a variety of association necessities. One of those necessities is insurance coverage for their buildings and grounds. This isn’t the same as homeowner’s insurance, which insures any property within an individual resident’s four walls in case of fire, robbery, etc. The building’s insurance company covers the actual building structure and its electrical, plumbing and other systems.

Holding Steady?

Thankfully, unlike other necessities today—milk, food, housing and gasoline, just to name a few—the cost of residential building insurance isn’t climbing the charts faster than a new Beyonce single. This might seem surprising, since there doesn’t seem to be anything immune from the rising prices of today’s economy. Add in the fact that there has been an uptick in manmade and natural disasters recently—think collapsing construction cranes in Manhattan, or flooding in the Midwest—and it would seem quite obvious that the cost of insurance protection would be on the rise as well. Fortunately, that’s not the case and HOAs might even be able to save a few bucks without sacrificing coverage.

“The costs of the premiums are falling slightly, and that’s driven by the soft insurance market,” says Michael McCormick, president, Pavese-McCormick Agency in Monmouth Junction. “There is a lot of competition because there aren’t a lot of carriers that will cover that industry.”

Not only are rates going down, but the pros say that menu options for insurance coverage have also changed quite a bit over the last few decades. The standard package policies still exist—these include property insurance, boiler and machinery and general liability coverage, and board members and managers should review the bylaws of their association from time to time to see what’s required.

“The charter and bylaws of a specific co-op or condo association can have a substantial effect on the master policy for the building, any changes made to these documents has the potential to affect future coverages,” says John J. Baldino of the public affairs department at State Farm Insurance Companies in Parsippany.

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