Keeping Costs Down

Brandon F. had a great question after last month’s Coverage Corner:

“While we all know insurance companies increase their rates when Associations make claims or multiple claims within a certain period of time, what can an Association do to reduce the total cost of their policy while keeping the same level of coverage?”

There are actually several things that communities can do to reduce the cost of their policies. The simplest by far is to increase deductibles. The higher the deductible, the lower the premium. Remember that for property insurance claims, the deductible amount can often be transferred to the unit owners that are affected by the loss. Keep in mind that a deductible is not a bill or an invoice. It is an amount of the repair cost that is deducted from the payment of the claim. The result is a leftover cost to repair property that can, in turn, be submitted to the unit owner’s HO6 carrier for coverage.

Another way to keep costs down is consistent and constant maintenance of the community. Having a well-maintained property will help reduce the risk of certain types of losses. Proactive managers and Boards of Directors educating homeowners about potential losses can also help. If your community includes safety information in your newsletters, conducts safety classes or drills, or otherwise communicates this type of information to the unit owners, tell your agent! This could result in additional credits on your account, especially if you have experienced losses in your community.

Having fire sprinklers can also result in credits for your community, however you will need to provide your agent or broker with certificates verifying regular maintenance in order to get those credits.

If you receive loss control recommendations from your carrier, respond to those recommendations quickly. Even if you are unable to afford the corrections immediately (for example, replacing balcony or stair railings), come up with a plan to incorporate the repairs over a reasonable amount of time. Communicating this information to your agent will show the carrier that you are making the effort and that counts!

If you have questions on how you can reduce premiums for your community, talk to your agent. There are almost always ways we can work with your budget.

Terri Guest, CIRMS, CMCA is the Northern California Sales & Marketing Representative for Berg Insurance Agency and can be reached at Terri@berginsurance.com.