If you are on a condo board, you have probably noticed an increase in insurance costs. In fact, according to Gulfshore Insurance, condo associations can expect to spend between 15% and 30% more on basic insurance coverage.
While some of this increase undoubtedly is due to historic inflation, the rest probably has more to do with conventional insurance-related factors.
An increase in claims
Lawsuits against condo boards and homeowners associations have skyrocketed in recent years. This has led to an increase in the number of high-dollar insurance settlements. Simply put, when insurance companies must pay to settle a growing number of claims, they must increase insurance premiums to remain profitable.
The recent condo collapse in South Florida has caused many insurers to give additional scrutiny to buildings across the country. When inspections and engineering studies reveal structural problems, condo boards must prioritize repairs. Still, once your insurance company knows about issues, you can expect it to raise rates.
In the past decade, insurers have offered fewer and fewer coverage options for condo associations. This means board members often have little choice but to opt for more expensive packages. Indeed, you may have to pay for coverage you are likely never to need. You also may have to purchase insurance that is more appropriate for larger condominiums.
As a condo board member, it can be frustrating to have to notify residents of constant price increases. Ultimately, though, because there is little evidence to show insurance costs are likely to decline any time soon, you may have to get comfortable with breaking bad news.