It is no secret that the insurance industry, especially for common interest developments in California, is in crisis. After several years of wildfires and other natural disasters, carriers are not only charging higher premiums, but also revising eligibility requirements with regard to infrastructure and giving greater scrutiny to insurance applications.

Take for example Campos Verde Condominium Association in Modesto. Built in 1968, this 101-unit community has always been well taken care of. The Board of Directors spends copious amounts of time following the recommendations of the reserve study to prevent deferred maintenance.

The board was quite surprised when they received a non-renewal notice from their insurance carrier in 2023. They didn’t have any large property losses and they aren’t in a wildfire risk zone. The reason for the non-renewal? Galvanized plumbing pipes and electrical panels that are on a “fire-risk” list. Dianne Cole, Board President for Campos Verde, explains that their yearly insurance premium went from $35,000 to $188,000 per year. Not only were they forced to pass a special assessment of over $1,500 per unit to pay for the drastic increase, but they also must replace the risky electrical panels and re-pipe the community. The out-of-pocket expense to each owner just for the electrical panels is $800- $1,000. “Honestly, the outlook is bleak for seniors and families as they try to cope with a limited budget, multiple assessments, and rising costs,” said Dianne.

To prepare for the questions that are coming – and if your community is over 25 years old, they are coming – it is recommended to start to prepare now. Communities built in the 1970’s or prior should pay close attention to electrical panels, wiring and plumbing as these are most likely to require replacement or updates. All communities should start collecting information, including permits, on all upgrades that have been completed either by the association or by individual homeowners. If the owners do not have records, permits can be pulled as public record requests. Inspections by qualified contractors may also answer some questions.

While these projects will be a lot of work, the benefit will be worth it. These next few years are going to be a wild ride when it comes to insurance.

Terri Guest, CIRMS, CMCA, EBP is the Senior Sales and Marketing Representative for Berg Insurance Agency in Northern California and may be reached at terri@berginsurance.com