Happy New Year from the Coverage Corner Crew!

Each January, we usually have a list of resolutions for community managers and board members. The bullet points often include things like increasing your insurance budget, confirming your community’s status with the Secretary of State’s office, and education for both managers and board members. This year, we’ve got a new one for you – check your loss runs.

*The following communities are not our clients, nor are we familiar with the management company involved. The information came from a news article on Insurance NewsNet.

Recently, a fraud scheme was discovered in some Santa Rosa condominium communities where a janitorial company filed insurance claims for smoke and ash cleanup after the wildfires. The board members of the associations were unaware of any work being completed or that claims were filed. Only after one of the communities received a non-renewal notice from their carrier due to losses were the claims discovered.

Regarding policies for common interest developments, The California Department of Insurance states that claims can be filed by board members, community managers, unit owners (members), or agents of members (for example a property manager of a rented unit). Generally, when a claim is received by a carrier, the broker on the account is notified and they, in turn, notify the board of directors. But if the notifications don’t get completed for some reason, there may be unknown claims lurking in your loss history.

So, your resolution for 2025 is this: request a loss history report (aka loss run) for all of your insurance policies. Go back at least five years. Understand that this may include policies with agencies or carriers you are no longer insured with. Per California Insurance Code §679.7, they have 10 business days to supply the requested reports.

When the reports are received, read them! Be certain that the claims shown on the reports are accurate and that you have the claim details. Make sure that old claims are closed, and reserves are removed. (A “reserve” is an amount a carrier sets aside as the cost they expect to close a liability claim. Sometimes those liability claims get closed, but the reserves are not removed, creating an inaccurate loss amount.) Have risk management programs in place to ensure that similar claims don’t happen. Communicate claim prevention information with the membership. Provide copies of this information to your insurance professional to show that the community is being proactive.

It is unlikely that the boards involved with the fraud discovery would have been able to prevent what happened, but it is a valuable lesson that others can learn from.

Terri Guest, CIRMS, CMCA, is Director of Client Experience & Education for Berg Insurance Agency in partnership with LaBarre / Oksnee Insurance. She can be reached at terri@berginsurance.com