In the wake of back to back hurricanes, the rest of the country is left to wonder how these catastrophes will play into their insurance coverage. In California, the threat of a looming earthquake has insurers and homeowners’ associations concerned for what’s to come. Although it’s still early, rate renewal bids are up in the air. However, we’ve provided some insights to address the questions that residents have regarding how their LA HOA Insurance policies might be affected.
One of HOA’s major concerns is the cost of the premium and the deductible rate, especially dependent on the size of the association. If, for example, the condos or homes were devastated by a quake, the cost of repairing them can be overwhelming.
In short, the premium is determined by the replacement value of the collective units within a community association, and the deductible is the amount of money that an HOA must spend out-of-pocket on repairs or replacements before the insurance policy will pay, explains Echo Community Association Blog.
Even with the hurricanes and tropical storms already faced this year, California is at high risk for experiencing a severe 6.7 earthquake within the coming years. In fact, each year that passes without a catastrophic earthquake, the more future chances increase. Therefore, insurers in these areas are bracing themselves for funding the recovery of another cataclysmic event.
According to Business Insurance, while reinsurers have had relatively low catastrophe losses since Superstorm Sandy hit New York and New Jersey in 2012 and while there is plentiful capacity in the market, the 2017 losses will hit traditional and nontraditional reinsurance programs and will likely drive up prices for some accounts, observers say. However, renewal discussions have just started, and it’s unclear how widespread any increases will be if reinsurers succeed in pushing them through.
With Hurricanes Harvey, Irma, and Maria, there are catastrophic losses faced by the insurance companies. Therefore, costs are going to reflect the damage in some varying degree nationwide. As losses are still being calculated, the reinsurance rates will continue to be projected between 5-20% increase.
It’s also possible that there will be temporary hardening of the market through the first quarter of 2018 (i.e. 5-10% rate increases), but since there is so much capital still in the market, it will soften as the year progresses. However, there are no set figures in place as of yet.
As more information becomes available, we’ll keep you and your HOA posted on these reinsurance developments.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOAs like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions, and Restrictions (CC&R), exposing the board, HOA and management to lawsuits – which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (818) 879-5980 ext. 201, or fill out our online form.