California HOA INS & Unit Experces

HOA Homeowners Association Townhouse Communties Hoa Costs and Unit expences.California Laws on Community HOA Insurance.The following information is not in tended to cover all facets of insurance for common-interest subdivisions. There are a great many aspects which should be considered to give the association proper coverage. The purpose of this section is to alert governing bodies to the need of tailoring casualty insurance and commercial liability insurance to the needs of the owners and association collectively.

The minimum insurance coverage required to be carried by a common-interest subdivision association is usually specified in the governing documents for the development as well as governed by Civil Code 1365.9 and 1365.7. However, the governing body will have many factors to consider in determining the most adequate insurance coverages to obtain for the most
reasonable cost. It may not be in the associations best interest to obtain only the minimum
insurance as required in the Covenants, Conditions and Restrictions. All common interest developments should consider insurance covering commercial property, commercial liability, Directors and Officers Liability,Fidelity Insurance and Workmans Compensation insurance and
earthquake insurance.

Planned Development CoverageFire, casualty and other insurance car ried by the homeowners’
association in a planned development is customarily limited to coverage attributable to destruction, damage and injuries which occur on the property owned by the association or by the owners incommon. The individual owner in a planned development normally carries fire and liability insurance on the individually owned lot. In some cases, however, where the planned
development involves clustered or townhouse-type residential structures, the association obtains a blanket policy covering all dwelling units. An advantage to the blanket policy is the lower premiums for equal coverage.

There is commonly owned property which normally comprises all of the real property except
that which is enclosed by the interior surfaces of the cubicles of space. Lenders financing the development with attached units, as a whole, will insist upon a blanket insurance policy providing single coverage for all of the insurable real property within the de vel op ment. An association must obtain coverage sufficient to satisfy the re quire ments of all lenders involved in
rebuilding units in the proj ect in case of a major loss. Failure to do so could result in the creating of problems between some unit owners and their mortgagees. Each individual owner should satisfy himself that the master policy adequately cov ers his insurable interest in the real property. If it does not, the individual owner may (if allowed by CC&Rs) secure his own insurance for the real property as well as the personal property located within the cubicle of space that is individually owned.

Co-Insurance Clause Some policies include a co-insurance clause which will operate to limit the insurer’s liability (with a cor re spond ing reduction of policy premium) in the event of a loss if the improvements are insured at less than 80% of their cur rent replacement value at the time of loss. A co-insurance clause places the responsibility of insuring the im prove ments at 80% or more upon the owners to avoid having a depreciated value given to the improvements in settlement of a loss. The effect of this clause is that if the amount of insurance falls below the required percentage of current replacement value the insured will co-insure replacement costs with signifi cant out-of-pocket costs involved. In most cases a co-insurance clause can be deleted through a waiver of coinsurance with an Agreed Amounts endorsement. In this case the insurance company agrees to pay a flat amount of the actual loss up to the agreed amount limit per occurrence per year.

Workers Compensation like a handyman .Workers Compensation is a form of liability insurance coverage that by California law must be maintained by any entity which falls within the statutory definition of employer to secure the payment of compensation to employees or their survivors in case of the injury or death of the employee attributable to his employment. Because the definition of an employee is extremely broad, it is recommended that an allowance for
this be included in all budgets. HOA Home Owner Insurance and more.see new Guideline. www.dre.ca.gov/pdf_docs/re25.pdf