The Yin and Yang of New Business and Renewals

Similarities, differences, and what to expect.

By Cecilia Garza & Tina Keele

This article first appeared in The Communicator Magazine, Spring 2025.

PART I: THE PROCESS FOR QUOTING A NEW COMMUNITY
When an insurance agent seeks to obtain quotes for a homeowner’s association (HOA), a structured marketing process is essential. This process ensures that the agent collects com- prehensive and accurate data, selects the most suitable carriers, and presents competitive and appropriate coverage options to the HOA board. Each step of the process is critical in minimizing risk, ensuring compliance, and ultimately securing a policy that meets the HOA’s needs. Here, we explore the detailed steps and rationale behind each stage of this process.

Why Data Matters

The first and most crucial step in obtaining an HOA insurance quote is com- prehensive data collection. Accurate data allows insurance carriers to assess risks effectively and provide tailored coverage. It also helps ensure that the policy remains intact post inspection by the carrier, avoiding situations where the policy is canceled due to undisclosed risks (e.g., unwanted electrical panels). Gathering precise information at the onset helps avoid future discrepancies, coverage gaps, or denied claims.

Watch for These Red Flags

Agents must be diligent in collect- ing information regarding updates to the property’s key systems, including plumbing, electrical, roofing, and HVAC. Failure to verify these updates can result in the agent submitting inaccurate information, leading to higher premiums or outright policy rejections.

For instance, outdated electrical pan- els pose significant fire hazards. Many insurance carriers will not cover HOAs that still use certain brands of electrical panels, including:

• Zinsco
• Sylvania
• Federal Pacific (FP)
• Murphy’s
• Challenger
• Potentially Bryant (Eaton)

Understanding the importance of these details ensures that agents only present risks that are insurable, improving the likelihood of policy acceptance.

Key Documents

Proper documentation is essential for under- writing and risk assessment. Each document serves a critical role in ensuring that the insurer fully understands the scope of the HOA’s operations and potential liabilities.

Plot Plan

A plot plan outlines property boundaries and infrastructure. It is essential in assessing the extent of coverage needed, potential shared spaces, and adjacent liabilities. Without a plot plan, the insurer may not accurately deter- mine what aspects of the HOA property need to be insured.

CC&Rs and Bylaws

The Covenants, Conditions, and Restrictions (CC&Rs) and the HOA’s bylaws define the responsibilities of the association and the unit owners. These documents help insurers understand who is responsible for what aspects of maintenance and insurance. Aligning coverage with governing documents ensures that there are no conflicts in liability assignments between the HOA and individual owners.

5-Year Loss History

A history of past claims is one of the most influential factors in determining insurability and premium costs. A pattern of frequent or severe claims may indicate higher risks, potentially limiting available carrier options. Conversely, a clean claims history can lead to more competitive quotes and better coverage terms.

Financials for Civil Code 5806 Compliance
Many states require HOAs to maintain a minimum level of liability insurance. Civil Code 5806 mandates that HOAs carry fidelity insurance (three months of dues plus reserve account balance/s) and that they demonstrate the financial ability to meet deductible obligations. Providing financial statements allows carriers to assess the HOA’s fiscal health and ability to sustain potential losses.

Reserve Study and Schedule of Values (SOV)
The reserve study evaluates the HOA’s capital reserves and future financial obligations, while the Schedule of Values (SOV) provides a detailed listing of the HOA’s assets and their replacement costs. These documents are essential in determining whether the insured limits are adequate. Underinsuring an HOA’s assets could lead to financial strain in the event of a loss, while over-insuring could result in unnecessary premium costs.

Applying to Markets: Market Strategy

Not all insurance carriers are suitable for every HOA. Instead of submitting applications indiscriminately, it is crucial to approach carriers strategically based only on the unique characteristics of the association versus what those carriers accept. For example, if a carrier does not accept communities that were built prior to 1985 and your community was built in 1970, it does not behoove that agent to apply. This targeted approach ensures better pricing, tailored coverage, and a higher likelihood of acceptance.

Blocked Markets

Insurance markets operate on a first-come, first-served basis, meaning once an agent applies to a carrier, that market is “blocked” for other agents. This exclusivity under- scores the importance of submitting a well-prepared and accurate application to your trusted insurance agent, not multiple agencies. Specifically, go through an inter- view process to select a trusted agent or broker and allow him or her to access the marketplace on your behalf. Selecting one trusted broker or agent versus many will also prevent a carrier from receiving multiple applications, thus avoiding costly delays.

Carrier Profiles

Each insurance carrier has its own under- writing preferences. Some specialize in older properties with unique risk factors, while others focus on new developments with low-risk profiles (no pool, low fire hazard score, year built, etc.). Matching the HOA’s characteristics with an appropriate carrier increases the probability of receiving favor- able terms and pricing.

PRESENTING PROPOSALS AND BOARD MEETINGS

Once the agent has secured multiple quotes, the next step is presenting them to the HOA board. Board meetings provide an opportunity for board members to ask questions, compare coverage options, and clarify any concerns before making a final decision. Coverage must also be conveyed to the board properly with comparisons made if multiple quotes are received.

Evaluating Carrier Quotes

When multiple quotes are provided, it is crucial to compare them based on more than just price. Key factors to consider include:

• Coverage limits and exclusions
• Deductibles
• Additional endorsements (e.g., building ordinance coverage, interior coverage, backup of sewers and drains)
• Claims-handling reputation of the carrier • Compliance with governing documents and civil codes

This due diligence ensures that the selected policy aligns with the HOA’s needs and legal obligations.

Binding Coverage Documentation

Once the board selects a carrier, the agent must ensure that all necessary documents are signed and submitted correctly. Missing or incorrect documentation can delay policy issuance, leaving the HOA vulnerable to uncovered risks.

Billing and Policies

The final step involves ensuring timely policy issuance and managing the billing process. HOAs typically have various billing structures, such as direct billing to the association or through a property management company. The agent must coordinate to ensure premium payments are made on time to avoid policy lapses.

PART II: THE RENEWAL PROCESS

After binding insurance with a new insurance broker or agent, has your level of service faltered and/or do you not know what to expect? The objective of any good insurance professional should be providing value to Common Interest Developments (CIDs) and Homeowners’ Associations (HOAs), through commercial insurance expertise, product knowledge, and dedication to service.

Whether your association has professional community management or is self-managed by the board of directors, a dedicated insurance professional, broker, or agent should directly service your association comprehensively throughout the life of the policy. Look for a licensed property and casualty broker with knowledge specific to the association’s needs. This strategy creates a continuous fostering of relationships through education and concise communication with you, the client.

As best practice, an annual review of insurance policies should begin for your association early. Proactive insurance agencies will begin at 120 days prior to the renewal date. Other agencies may begin at the 90-day mark. This is the catalyst for internal review, assessment, and marketing for all of the insurance policies that each individual HOA has. A good broker or agent will evaluate the governing documents, such as the bylaws, and covenants, conditions and restrictions (CC&Rs). Looking specifically at the insurance section of those documents, your insurance professional should confirm that all insurance policies adhere to the stated limits, valuation, and coverage requirements. In tandem you should be asked renewal questions on a yearly basis. Pertinent information, such as, but not limited to, currently dated loss history, financials, reserve study, and policy limit revisions, among other items, should be requested. If you are not being asked these questions, the insurance proposed may not be adequate or account for any revisions and/ or changes that may be needed.

The goal within the renewal marketing process is to provide the insurance proposal as close to 30 days prior to the insurance renewal date. This timeline benefits all par- ties involved, from management to the board of directors. It is with a timely review and approval of the options provided to your association that a comprehensive analysis of available options can be comprised. Additionally, pre-qualifying and early sub- missions to available target markets is an imperative benefit to the association. If any insurance carrier has delays in releasing coverage quotes, your broker or agent should continually provide updates for the renewal

proposal timeline. You should receive consistent and transparent communication.

Once the insurance coverage has been renewed for the policy term, dedicated ser- vice to you and your association should be provided. If an association incurs damages due to any loss or occurrence, you should be able to correspond directly with your broker or agent for advice and options regarding submissions of claims. Look to your broker or agent to have qualified, dedicated internal teams or a separate claims department assist you. They should have the ability to communicate directly with your management team, board of directors, or unit owners by vetting and submitting claims. Because each association’s insurance policy is different, based on requirements for their governing documents, they should be able to ask relevant questions to best assess each claim individually.

A good claims department or claims professional will advocate intuitively to streamline communication between the insurance carrier adjuster and clients. This is imperative within the inception of submission, during, and at the final determination of any claim. Not all claims are similar and damages will vary differently for each common interest development or HOA. Some claims may be for first party property damages, while others may be exclusively based on liability. Whatever the situation, if any claims process becomes stagnated or there is a delay in the progress, your claims professional should promote efficacy between all parties involved.

Customer service and support is a funda- mental benefit to clients and one that you should require. In the fast-paced modern working world of AI and autonomous communication, you should receive direct responses to individual insurance inquiries. Insurance questions and requests to your insurance broker or agent should be returned in a timely manner. Your insurance professional should be responsive to mortgage lenders, banks, and unit owners. The more your broker or agent can assist you and your association, the less you need worry. Let the insurance expert be the guiding force to your association’s overall success.

Finally, accessibility to your insurance professional, broker, or agent is crucial. Set expectations for transparency and presence. You should count on your insurance professional

to attend in-person and virtual meetings. This can be directly or simultaneously with management, your board of directors, and/or unit owners. Live real-time collaboration is an essential quality your insurance professional should have.

COMMITMENT TO EXCELLENCE

Community managers and homeowner leaders deserve a commitment to excellence. Your insurance professional should provide expertise through clear product knowledge, both beginning with the inception of service and during the yearly insurance renewal process. They should not only create a successful partnership that fosters long-term value and trust, but also deliver a stellar customer service experience. Securing and maintaining proper insurance coverage for an HOA is a complex but essential process that requires diligence, expertise, and ongoing management. From the initial data gathering and market selection to renewals and claims advocacy, every step plays a crucial role in protecting the association’s financial health and long-term stability. Community managers and board members must work with knowledgeable insurance professionals who provide clear guidance, consistent communication, and a commitment to aligning coverage with the association’s needs. By taking a strategic and informed approach, HOAs can mitigate risks, ensure compliance, and safeguard their com- munities for years to come. ■

Christina “Tina” Keele is a 23-year insurance veteran who holds her Property & Casualty Broker’s License and has earned the distinguished Community Insurance Risk Management Specialist (CIRMS) designation through the Community Associations Institute. She is a past president of CAI-CNC and has sat on several committees as well as chaired committees. Keele specializes in supporting homeowners’ associations across California.

Cecilia Garza has more than 11 years of professional commercial insurance experience. She holds her Property & Casualty Brokers License in the State of California, as well as the California Certified Industry Partner (CCIP) designation through the California Association of Community Managers (CACM) and has an Associate of Arts and a Bachelor of Science degree.