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5. Require regular dryer vent cleaning and chimney inspections/cleanings.


6. Install water sensors and shut-off valves (some of these can now be controlled via a smart phone app).


7. If your association has an un-sprinklered or partially sprinklered parking garage, consider making it fully sprinklered.


8. Older, un-sprinklered or partially sprinklered buildings are becoming more difficult to insure; consider retrofitting your un-sprinklered building(s) to allow for better rates and carrier options.


9. Conduct a Reserve Study or Reserve Study Update (and make sure to fund the study) and follow through with improvement projects – follow statutory requirements for reserve studies if your state has them.


10. Require tenants to carry renters’ (HO-4) insurance.


11. Consider a rental cap.


12. Proactively address maintenance-related issues – before they become claims.


13. Keep good records to track patterns in losses and the problems that lead to them.


14. Keep track of what was original to a unit’s interior to assist at time of loss.


15. Develop emergency preparedness procedures.


16. Pass a Tort Immunity Amendment to your bylaws (only applies in New Jersey), to prevent unit owners


and their spouses from suing except in cases of a “willful, wanton, or grossly negligent act or omission” by the association.


17. Address any building defects or issues (i.e., older roofs, Federal Pacific electric panels, troublesome plumbing, downspouts that empty onto paved surfaces, etc.).


18. Consider increasing your property damage deductibles, even if not mandated by your insurance carrier.


19. Pass a Deductible Bylaw Amendment that will allow the Association to shift deductible responsibility to an owner (in certain or all circumstances).


20. Adequately fund the association’s budget and reserves to address unplanned maintenance and any association-responsible deductibles.


Addressing these issues may not always result in decreased insurance premiums, but they can help prevent or reduce future claims, avoid special assessments, allow for less extreme rate increases at renewal, and improve your ability to attract more carriers.


Takeaway While we are not yet out of the woods regarding the insurance crisis affecting community associations within our own CAI Keystone Chapter, there are some signs of a slowdown of the massive increases experienced by most associations in recent years. Still, improved renewals are also an association’s responsibility. Doing nothing in terms of maintenance, repair, and replacement is always an option, but you will likely continue to be dealt a bad hand of


cards. A proactive approach that makes you attractive to insurance carriers is more likely to result in a more winning hand.


It is important to be mindful not only of continued carrier underwriting restrictions, but also deductible caps instituted by Fannie Mae and Freddie Mac in the last year which may limit a carriers’ ability to offer coverage if it cannot protect itself through higher deductibles. CAI and other organizations are diligently working to address these issues with lenders and are also advocating for more carrier options including access to State Fair Plans to help with some of your associations’ insurance needs, but these efforts may not yield immediate results in PA, NJ, or DE.


Time will tell if we ever return to pre-Covid era insurance rates, and as the incidence of catastrophic loss (hurricanes, tornados, and wildfires) increases and the insurance industry adapts to address these types of losses, it is crucial for boards of directors to be forward thinking about risk management. We encourage you to team up with the right coach who can help you to navigate through the tough times ahead and help your community be the best it can be.


ABOUT THE AUTHOR David Velasco, EBP is a Managing Advisor at The Baldwin Group. He specializes in Condominium, HOA and Co-Op insurance. He is an avid CAI advocate and determined to helps Associations understand insurance and improve their insurability. Contact David via email at: david.velasco@baldwin.com 


www.CAIKey sto ne .org 23


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