Well Prepared Reserve Studies Can Help You Stand Strong in a Shifting Insurance Market


Erik Sundquist, RS, SMA Reserves, LLC


California’s community associations are facing one of their most diffi cult fi nancial challenges


in decades: insurance


coverage is becoming harder to secure and dramatically more expensive.


Premiums are rising, deductibles are ballooning, and in wildfi re-prone regions, many carriers have stopped writing new policies altogether. For board members and managers, this shift is more than an insurance issue—it’s a community stability issue. Two of the most overlooked tools in navigating this crisis are a component-complete reserve study and adequately funded reserves.


A Changing Insurance Landscape HOAs


that once received several


proactive, and well-documented stand a better chance of staying protected and insured.


That’s where a reserve study comes in.


The Value of a Current Reserve Study A reserve study does more than forecast roof replacements or paint cycles. It signals to insurers that your association understands its physical assets and has a plan to care for them. When insurers see an HOA with a current, professionally prepared reserve study—especially one showing adequate funding—they see an association that takes risk seriously.


insurance quotes are


now lucky to get one or two. Where premiums used to feel manageable, increases of 30 percent or more year-over-year are becoming common. Some associations have seen their coverage dropped altogether, forcing them to scramble for policies that are often more limited and more expensive. This trend is particularly evident in areas designated as high wildfi re risk, where the threat of catastrophic loss looms large.


In a recent episode of “The Maintenance Manager” podcast, Cory Neubauer of Next Tier Insurance emphasized how California’s insurance challenges mirror the catastrophe- driven markets of states how natural disasters such as


like wildfi res,


Florida. He discussed combined with


infl ation and regulatory pressures, have created a “perfect storm” for insurance providers. The result has been stricter underwriting, fewer options, and skyrocketing premiums for community associations.


Neubauer stressed the need for board members to understand their policies, particularly exclusions and coverage limits. He encouraged frequent engagement with brokers, proactive maintenance, and careful risk communication as strategies to help HOAs weather these shifts. His advice echoed a core truth:


communities that are informed, 22 July | August 2025


Insurers often ask about the condition of common area components, recent major projects, and whether the association has funds to cover high deductibles. A solid reserve study answers those questions before they’re even asked. It can demonstrate that the community has planned for the inevitable and isn’t reliant on emergency measures or surprise assessments.


Reserve studies also provide the roadmap for timely


maintenance, estimating when roofs will need to be replaced, when painting should occur, and how long elevator systems are expected to last. Associations that follow this roadmap are better equipped to maintain the integrity and safety of their properties, which directly reduces risk.


Reserves and Risk Management


The hard market has forced many associations to consider higher deductibles as a way to control premiums. However, boards


should carefully consider the impact of higher


deductibles on the board’s ability to fund necessary common area repairs after a casualty loss using the reserve account. A high deductible only makes sense if the association has money set aside to cover it, or the homeowner has money set aside (or insurance proceeds on the homeowner’s policy) to cover it when the deductible is the responsibility of the homeowner.


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