In areas like South Florida, the increasing cost of wind coverage insurance isn’t just a matter of concern; it’s a critical issue affecting many associations. This isn’t merely a formality – it’s about protecting properties and fulfilling fiduciary duties. Without such coverage, the legal and financial consequences of a catastrophic storm could be severe.
Communicating with Residents
Effective communication with residents is essential, as higher insurance costs directly impact on them. Additionally, the insurance market, like real estate, is cyclical. Current rate increases may attract more insurers, offering better options for communities in the future. However, no one knows when that time will come.
Considering Underinsurance
A recent conversation with a public adjusting expert brought up an unconventional idea: underinsurance. With the low likelihood of total building destruction and rising construction costs, could insuring buildings for less than their total value be a viable option? Current norms require buildings to be insured at 100% of replacement cost, but we must ask: who benefits most from this? Is there room for flexibility, especially for buildings struggling with affordability?
The Need for Dialogue
While we’re not advocating for associations to underinsure, starting a conversation on these challenges is vital. We must consider all possibilities, including the risk of pushing associations into bankruptcy or condo termination due to increased insurance costs and required reserves. Innovative and collaborative solutions are crucial in the coming years.
Join the Conversation
We’d love to hear your thoughts. Would you consider options like underinsurance with higher deductibles if they were available? Join the conversation and share your insights with us on our social media channels!
If your association is grappling with rising insurance costs and looking for innovative solutions, contact Affinity Management Services today. Our experts can help you navigate these challenges and find the best options for your community.
