The Blind Spot in Your Reserve Study

What Insurance Carriers See That Perhaps Your Funding Plan Doesn’t Take Into Consideration

By Charlotte Allen, CIRMS

This article first appeared in the Communicator Magazine, Summer 2026 Issue.

The reserve study is something well- intentioned community associations take seriously. It gets updated every three years, disclosed to homeowners annually, drives budgets, shapes special assessment conversations and gives boards and community members a sense of security. And, I’m here to tell you it often has a blind spot, one that is unexpectedly impacting communities.

The Reserve Study Does What It’s Supposed to Do

Let me be clear, I am not here to criticize reserve studies. They are legally required under our Civil Code for very good reasons. A well-prepared reserve study identifies major components of your association’s common areas and estimates their remaining useful life, develops replacement and repair cost estimates and lays out a plan so that the association isn’t blindsided by a major component they would otherwise not be prepared to handle. But, is every major component accounted for?

The reserve study typically considers roofs, painting, asphalt, elevators, fencing and many other tangible components that deteriorate over time. It’s a financial planning document, and when it’s done well and followed, it’s one of the most valuable tools for a common interest development.

Here’s the problem: Your insurance carrier is often following a slightly different playbook.

What the Carrier Wants To Know

When an underwriter sits down with your renewal application, or worse, when they’re deciding whether to renew your community’s coverage, they are reviewing the reserve study and checking off and scrutinizing line items. Additionally, they are asking a set of questions that your reserve study usually isn’t yet designed to answer.

What type of electrical panels are installed in the buildings? Are they Zinsco, Federal Pacific Stab-Lok, GTE Sylvania or other brands deemed dangerous and unacceptable to many insurance carriers? What kind of wiring runs through the association’s walls? Knob-and-tube or aluminum? Has the wiring been inspected recently? What are the plumbing lines made of? Galvanized steel, polybutylene or copper?

These are not hypothetical questions. They are found on insurance applications right now. And, for communities built in the 1960s, ’70s and ’80s (and, of course, California has an enormous number), the answers to these questions are increasingly the difference between getting an admitted insurance carrier at a digestible premium or getting forced into the surplus market at sometimes three times the cost.

Here’s what I need managers and boards to understand. Most of these components are not standard line items in a typical reserve study. I have spoken with several reserve analysts, and most agree these components 1) were not considered in the original studies due to the expected longevity of these items and 2) require invasive investigation in order to determine their useful life and type of material and repair costs, which are typically outside of a reserve analyst’s scope and ability.

The Gap That Nobody’s Talking About

Reserve studies are built around components with a defined useful life and a predictable replacement timeline of 30 years or less. We know that roofs wear out, paint fades, asphalt cracks and pool heaters fail. These are often visible and measurable.

Electrical panel type? That’s not really a “useful life” question; however, it is a highly sought-after safety and insurability question. A Zinsco panel can sit in a building for 50 years and appear to function normally. The problem isn’t that it’s old; it’s that some breakers can fuse and fail to trip during an overload, creating a fire hazard that is invisible until it’s too late. Insurance carriers don’t necessarily care that the panel still “works.” They care about the probability that it will fail. This is data that insurance carriers lean on to determine insurability of opportunities and the information on Zinsco and other aforementioned panels is extremely unfavorable.

The same logic applies to plumbing materials. Galvanized steel pipes don’t just wear out in a specific timeline. They corrode from the inside, restricting water flow and eventually failing. Sometimes this happens gradually, sometimes unexpectedly. Polybutylene pipe, generally installed between the late 1970s and the mid 1990s, is considered a ticking clock. Carriers know this. Reserve analysts may or may not include it.

The result? A board that’s been diligently following its reserve study, funding aggressively, replacing components as scheduled and doing everything right by the numbers. Suddenly, they are a board that gets a nonrenewal notice they genuinely may have never seen coming. They’ve done everything the reserve study told them to do. They just didn’t do the things the insurance carrier needed them to do because nobody told them those things were connected. Maybe until now.

This Is Not a Reserve Study Failure; It’s a Communication Failure

I want to be careful here because I have a lot of respect for the reserve study professionals in our industry. They are doing exactly what they are asked to do: evaluate visible, depreciating physical components and project replacement and repair costs over a 30-year scale. That’s their job, and most of them do it well.

The issue isn’t that reserve analysts are getting it wrong. The issue is that the insurance underwriting conversation and the reserve planning conversation are happening in two different rooms, and the door between them remains closed.

When a carrier sends an application that asks about electrical panel type, plumbing material, and wiring age, they’re assessing the risk. When a reserve analyst walks the property and logs roofs, decks and mechanical equipment, they’re evaluating depreciation. Both are valid. Both are necessary. But they’re not the same thing, and when communities treat the reserve study as their complete infrastructure roadmap, they’re missing critical components that can put a gaping hole in their budget overnight.

Think about the math for a moment. If a condominium community discovers it has Zinsco panels in every unit, that’s potentially hundreds of thousands of dollars for the full project to replace them. It’s an expense that can absolutely deplete budgets, and if those items weren’t in the reserve study, they weren’t necessarily accounted for, nor funded, and the board is now facing a special assessment on top of a premium increase that may have already tripled their insurance costs.

That’s not just a rainy day; it’s truly a financial emergency.

What Carriers Are Looking at Right Now

For those who want the short list, here are some of the infrastructure items that are generating the most scrutiny from insurance underwriters in the current California insurance market:

•  Electrical panels and breakers, specifically Zinsco, Federal Pacific, Stab-Lok, GTE Sylvania and Challenger. These are being treated as hard declines by many admitted carriers. If your community has them, plan to either replace them or move to the surplus lines market at a sometimes significantly higher premium.
•  Wiring type, knob-and-tube and aluminum wiring are red flags to underwriters. Aluminum wiring may require mitigation rather than full replacement, but carriers will want thorough inspection and documentation.
•  Plumbing materials, galvanized steel and polybutylene piping are the primary concerns. Carriers often request proof of replacement, intentions to do so, or expert inspection and reporting.
•  Roofing, particularly roofs that are past their expected useful life. This one does overlap with reserve studies, but the carrier’s timeline may be more aggressive than the reserve analyst’s estimate. When this happens, communication between the manager and board and reserve analyst and broker can be incredibly prudent in collecting helpful data.

And here’s the part that catches a lot of people off guard: Carriers are no longer accepting “this component is homeowner responsibility” as an answer for items located within individually owned units. If the electrical panel in Unit 4 is Zinsco, and the master policy covers the building, the carrier wants to know about it, regardless of who is responsible for maintaining it under the governing documents. The days of answering those application questions with “not our problem” are over.

So, What Do We Do About It?

This is the part where I shift from problem to solution, and where I’m going to ask managers and boards to do something that might feel uncomfortable. Think about your reserve study and your insurance plan as connected documents that need to be talking to each other.

•  First, get your infrastructure data. If you don’t already know what type of electrical panels, wiring and plumbing are in your buildings, find out. Hire qualified, licensed contractors to inspect, document and replace components. Collect permits and records. If individual owners have already upgraded these components, get the proof and provide it to your insurance professional.
•  Second, consider talking to your reserve analyst about adding these components. Even if electrical panels and plumbing materials haven’t traditionally been included in your reserve study, I am hopeful we see a shift in this direction based on need and industry pressure. If there’s a known replacement requirement and if the carrier is mandating it, that’s a future capital expense the reserve fund likely should account for. Adding it to the reserve study creates a funding timeline and signals to the insurance carrier that the board has a plan.
•  Third, communicate proactively with your insurance broker. Don’t wait for the renewal application to reveal problems. Share inspection reports, contractor proposals and project timelines with your broker well before your renewal date. A carrier that sees a board with a plan is far more likely to offer favorable terms.
•  Fourth, talk to your membership. Boards sometimes avoid these conversations because they’re uncomfortable. Nobody wants to announce a special assessment or a major infrastructure project. But, the alternative, a surprise nonrenewal, substantial premium increase or major coverage gaps are far worse in my opinion. Transparency builds trust, and you do not have to do it alone. Bring in your team to help lead the community conversation.

Choose the Broker Who Educates

I’ve been in this industry long enough to learn that the communities that fare best in hard markets are the ones who aren’t reactive, but proactive — the ones that understand a reserve study is the beginning of the financial planning conversation, not the end. And, they’re the ones whose insurance brokers are at the table not just at renewal time, but year-round, educating, advising and helping to connect the dots between what the reserve study says and what the carrier needs done in order to offer (affordable) coverage.

The blind spot in your reserve study isn’t a flaw in the document. It’s a flaw in how our industry has separated these two conversations. It’s time to adjust the mirrors between them. Your reserve study may tell you when the roof needs to be replaced. However, your insurance carrier wants to know if the building is going to catch fire before you get there. Both questions matter. And, the communities that take both into account, financially and task-wise, are the ones that will gain the best results.

Charlotte Allen, CIRMS, is the director of education & industry partnerships at Socher Insurance Agency, a HUB International Company, specializing exclusively in HOA and community association insurance across California. She serves nearly 3,000 communities.