Without adequate reserves, a community might be forced to delay critical repairs or assess owners on short notice.


Properly funded reserves also help prevent small problems from becoming big ones. Deferred maintenance increases risk, and risk is what insurance companies want to minimize. An HOA that keeps up with its painting, roofing, and other common area needs is a safer bet. It demonstrates that the association is actively managing risk, not just reacting to it.


Neubauer’s insights reinforce this: the condition of a


community’s property and its ability to address wear and tear before it leads to claims directly influence how insurers assess and price risk. Proactive maintenance isn’t just good stewardship—it may lower premiums and keep coverage accessible.


Financial Stability = Insurability


Insurers aren’t just looking at brush clearance and roof type. They’re also looking at the financial health of the association itself. Underwriters often review reserve balances, special assessment history, and whether the board has a track record of following its reserve study.


An association with low reserves is more likely to delay projects, levy unpopular assessments, or face legal exposure. One with healthy reserves and a proactive funding plan is in a stronger position to weather both physical and financial storms. More importantly, it demonstrates


leadership that anticipates challenges rather than simply responds to them.


In some cases, insurers may even consider reserve levels when determining policy terms. A well-funded HOA may be in a stronger negotiating position, able to justify higher deductibles or request coverage adjustments because it has the financial cushion to manage risk. It’s a virtuous cycle: good reserves support good insurance, and good insurance protects the long- term viability of the community.


Clarity in a Complex Market


Reserve studies aren’t just about long-term planning. In today’s insurance market, they are risk management documents. They speak to insurers, lenders, and members. They help boards make smart decisions under pressure. And they give communities a clearer path forward when facing a rapidly shifting financial landscape.


Board members may feel overwhelmed by the current market. What used to be a relatively straightforward annual renewal process now requires strategic thinking and documentation. Managers may be tasked with explaining significant premium hikes to owners. In this environment, clarity and preparation are critical.


That’s where reserve study preparers come in. By providing boards with accurate, timely, and easy-to-understand studies, they help communities navigate these financial headwinds.


www.caioc.org 23


The reports don’t just serve as planning tools, they provide credibility. They


show that an association is informed, and prepared.


The Path Forward As this insurance crisis evolves, one thing remains clear: associations that prioritize planning and preparation will fare better than those that do not. While we can’t control the actions of insurers or the impacts of climate change, we can control how we prepare. Ensuring that there is a complete and accurate reserve study is a powerful first step.


It ensures that the association knows what’s coming, how much it will cost, and when action is needed. It gives boards the confidence to make informed decisions and the documentation to support those decisions with members, lenders, and insurers alike.


In a world where risk is rising, preparation is protection. For every board member wondering how to keep premiums manageable, and for every manager wondering what insurers want to see, the answer may begin with a simple question: “Is our reserve study complete and accurate?”


thoughtful,


“In today’s insurance market, a well- prepared reserve study is more than a planning tool— it’s a statement of financial strength and risk awareness.”


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