Tag: personal property insurance

Presentation by Dianna Kaspar, CAU agent for HOA insurance, August 23, 2024

Note: If you have questions regarding any of the insurance information provided for you from Dianna’s presentation, please contact Insurance Chair Susan Hamman at: (360) 683-1800

    • This handout was compiled by Rob Baer and Carol Stults, Division 7 Board Members. It was modified for Division 17. Many thanks to Rob and Carol for taking detailed notes during Dianna’s presentation!

Dianna Kaspar, CAU broker for Division 17 condo insurance, spoke to several condo divisions at the Sunland Golf Course ballroom on Friday, August 23rd. The following is a summary of the important points and discussion topics regarding condo insurance – both Division 17’s HOA insurance and the individual personal HO-6 condo owner’s policy.

It is noted that Dianna is not an attorney and does not give legal advice on governing documentation for HOAs. The information below was given as a starting guide for both HOA Boards and condo owners to note and research further as it relates to each owner’s coverage and the Association’s insurance coverage and governing documents.

Insurance Industry Trends

Dianna reported that the costs for insurance for HOAs in particular are rising by 15-20% for 2025. The insurance industry is reporting losses totaling $58 billion globally from January 1, 2024, through July 31, 2024 – and most of it in the U.S. The U.S. has been negatively impacted by a significant number of natural disasters in 2024 to date, including

    • Midwest tornadoes which bring hail, wind, and rain
    • East coast hurricanes
    • West coast wildfires

Insurance Coverage for Division 17

Coverage for Division 17 is outlined in the Certificate of Insurance, including details on the coverage for Property, Excess Liability, Directors/Officers Liability, Fidelity, and Excess Fidelity. Owners should present this to their insurance agent who handles their HO-6 coverage.

Insurance Policies for Condo Owners and HOAs

    • CAU has written an insurance policy for the Sunland Division 17 Owners Association (as the CLIENT) which covers “All In” insurance. This means that the CAU policy covers the building and Common/Limited Common Areas – including the interior and exterior components of the building – cabinets, ceilings, floor coverings, wall coverings, countertops, permanently installed appliances, plumbing, and electrical fixtures. Note: there are a few exclusions but that is basically the coverage under the CAU policy.
    • The deductible applied to Division 17’s general policy is $10,000 per claim.
    • The deductible is the responsibility of the unit owner for whom the claim is made.
    • The Owners in Division 17 should have coverage for damage under their own personal HO-6 policy as well as coverage above $10,000 damages for some of the interior components that the Owner is responsible for maintaining under Division 17’s governing documents. The deductible for the Owner’s personal policy is up to each policy chosen by the Owner per advice from their own agent.
    • Note: the current CAU insurance policy coverage does not change in any way the responsibilities of the Owner for interior maintenance, including components such as plumbing, outdoor faucets, electrical systems, hot water heaters, furnaces, appliances, cabinets, fireplaces, and flooring.
    • The fact that the Division 17 CAU policy covers the interior components does not mean there is a change in Owner responsibility for the interior portions of the Units. Owners continue to be responsible for the day–to-day maintenance and repairs to all the interior components of their Units from the outside wall in, per the descriptions in the Governing Documents.

Insurance Claim Process

When damage occurs due to a defined event (not over a longer period of time), a claim can be filed with either or both policies, depending on the cost to repair the damage and if the damage is only to exterior components

    • Any damage to the Unit’s components – interior or exterior, the Owner should call both their personal insurance agent AND notify the Insurance Chair or the Treasurer of the Board of Directors. CAU will be alerted to the damage by the Board’s Insurance Chair as their representative. The Owner should not call CAU directly regarding claims since Division 17 is the client under the CAU policy.
    • If there is interior damage to the Unit and the damage is under the $10,000 deductible, the claim will be handled completely by the Owner’s personal homeowner’s insurance agency.
    • If there is interior damage that exceeds $10,000, the Board’s representative will speak with Dianna Kaspar as our agent. Dianna will review the incident and damage and assist Division 17 in determining if a claim should be filed. NOTE: No claim will be filed with CAU until the Board of Directors’ representative specifically notes in writing that a claim is being requested. The Owner will work with their own agent in parallel, and if a claim is filed under CAU, CAU will send an insurance adjuster to investigate and confirm the extent of the damage. Interior damage claims will be paid to Division 17 MINUS the $10,000 deductible. Division 17 will remit the payment to either the contractors directly or to the Owner as outlined in their own procedures. CAU will not guarantee payment on the claim until their investigation is completed.
    • If there is exterior damage only, CAU and Division 17 (as the client) will work together on filing a claim and the remediation of the damage.
    • Remediation to prevent further damage: It is important that Division 17 and the Owners work to mitigate any additional damage quickly, such as shutting off the water or covering a hole in the roof, to prevent further loss over time. Damage done due to negligence in mitigating further damage may not be covered by the CAU policy.
    • The Owner’s personal HO-6 policy or other personal policy may have different procedures to follow in an emergency. Owners should report damage to their own agent for guidance on mitigating further damage.
    • Remediation companies such as Servpro may come out to assist immediately, but they may charge a fee that is more than what both insurance companies may be willing to reimburse to the Owner or Division 17. Unfortunately, in some situations, that may be the only solution to mitigate further damage or restore the damage enough until a claim can be completed.
    • Important: Dianna recommends that you check your HO-6 policy with your agent and be sure that you have adequate coverage for sewer and drain backup on that policy. Some HO-6 policies limit that coverage to $5,000 total. In Dianna’s opinion, that is not enough to repair damage from a sewer or drain backup as those repairs can often exceed $100,000 in damages.

Deferred Maintenance

Deferred Maintenance is a hot topic for HOAs right now per Dianna. Deferring regular exterior maintenance of buildings and their components as well as owners not regularly checking for issues with interior systems like plumbing, electrical, and appliances can cause significant preventable damage. This can have a big impact on claims being approved and reimbursed for the cost of repairs.

Consider the hot water tank that runs every day to provide hot water. Once these appliances have reached a certain age (over 15 years old), they may fail due to rust or corrosion in the bottom of the tank. The resulting water leak can move through an entire unit and ruin flooring or carpeting, as well as damage wood trim and cabinets. The costs of repairing the damage from a large water leak can exceed $20,000 very quickly.

HOAs that have existed for over 20 years must deal with aging structures and systems, as well as the recent significant cost increases to construction. Dianna recommends proactive attention by Owners to the interior systems that cause water leaks, in addition to proactive attention by the HOA to continue maintenance. Deferring maintenance because Owners don’t want a dues increase or a special assessment may end up costing a significant amount if there is damage due to deferred maintenance.

The other issue with interior deferred maintenance is a cycle of several aging appliance failures (e.g. hot water tanks, washing machine hoses in units) that cause expensive damaging leaks. After multiple claims occur that indicate possible deferred maintenance or replacement by the Owner, CAU may choose not to renew the HOA’s policy. Or the HOA could face a requirement by the insurance underwriter requiring an inspection of all water heaters in the Association to confirm they are well within a warranty period – an expense that would be the responsibility of the Owner who is charged with managing the maintenance of interior appliances.

Dianna stated clearly – it is easier and less expensive to prevent the loss before it happens. Anything that Owners can do starting now – regular inspections of aging hot water tanks and electrical systems, for example, will result in finding any issues BEFORE any failure creates a significant water damage claim.

Dianna also reiterated the need for regular roof inspections including tile roofs. Roofs should be inspected regularly and damage repaired in a timely manner or the HOA will be replacing the whole roof unexpectedly. NOTE: Division 17 began a rotating schedule of yearly roof inspections in 2024.

Owner Responsibilities

Proactive Maintenance and Practices for Damage Prevention

It is very important that owners recognize their maintenance responsibilities to the interior and Limited Common Areas of their Units.

Regular inspections of interior systems or appliances that could cause water damage or fire is necessary for everyone’s safety and to keep costs down for the HOA insurance coverage. The premiums for our insurance are one factor in driving up the annual budget which results in increases in dues assessments.

Steps Owners must take when leaving a Unit uninhabited for extended periods of time (per suggestions by Dianna Kaspar).

In order to avoid water damage, be sure to follow the following steps to ensure no leaks will cause damage during your absence. Remember that your unit abuts other units and leaks and fires can affect more than just your own home.

    • If you are a snowbird or gone for extended periods of time (over a week), it is highly recommended having someone trustworthy have access to your home who will come and check on your property routinely during your absence. Every 7 – 10 days is a good rule of thumb (that timeframe is within the 14 day maximum time for reporting water damage).
    • Make sure whoever is checking your home knows how to shut off the water or has the number for the Sunland Water District (360-683-3905) for assistance. NOTE: after business hours, you can dial 360-683-3905 and select #3 on the call menu to reach Tim Berger, the District Manager, per the Water District’s website.
    • Before you leave, proactively turn off the water to your home and drain all hoses and outdoor faucets completely before leaving.
    • Disconnect all outdoor hoses from the faucets during the cold weather months and install and insulated faucet covers (covers are very inexpensive).
    • In cooler weather, leave the heat on at a low level so the systems in the unit do not freeze during unexpected cold weather.
    • If your water shut off valve is outside your unit, you might consider having an inside shut off valve installed in your garage or unit. It makes it much easier to turn off the water supply.

Fire Prevention

    • Owners should never use any open wood fires in the Common or Limited Common areas under any circumstances, as noted in the Rules and Regulations – with no exceptions. Burning of any material outside in the Common area is forbidden.
    • Do not place your barbecue against any wooden siding or other wooden objects while in use. Use caution when lighting a propane grill.
    • Propane heaters should be located away from any wooden surface when in use and Owners should use extreme caution when lighting these devices.
    • Owners may make use of portable Propane heaters and fire pits on their unit’s deck. Owners may not make use of portable Propane heaters and fire pits where their deck is covered by a roof.