Here’s an interesting (and frightening) insurance article from The Wall Street Journal. The report seems available on the subscribers’ only site as well as generally online, so here’s a link that should work: Big Jump in Insurance Costs Strikes Condos.
One association’s insurance renewal went up four times with 12 carriers refusing to even quote a policy, likely due to the many recent natural disasters and higher rebuilding costs. Industry statistics show average condo insurance increases of 20% with some being 300% to 1,000%. And such increases come on the heals of some states requiring greater expenditures by condominiums as to structural upgrades or inspections in the wake of the horrendous Florida Surfside condo collapse in 2021. At the same time, other states are considering legislative proposals to make it more difficult for associations to collect assessments or to increase association budgets, either of which could make paying increased insurance premiums difficult to impossible.
There is no perfect solution. However, many of our associations in the past few years have had us assist with declaration amendments that re-allocate insurance risks with owners. That’s because there are often options for changing how insurance is purchased or claims handled that benefit everyone. At a minimum, be aware of this coming perfect storm for condominiums of significantly higher insurance premiums, other increased expenses, and flat or reduced revenue. All of that makes planning and budgeting for future needs and possible unexpected expenses more important than ever.
If you have questions about this or any other HOA/condo related matter, please contact one of the community association attorneys in our Charlotte, Raleigh Greensboro, or Wilmington (NC) or Greenville or Columbia (SC) offices.
Author: Jim Slaughter
Articles have been Reprinted with permission from Black, Slaughter, Black.
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