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HOA life isn’t just about bylaws and board meetings, it’s about building something real.
Welcome to Hey Neighbor, the podcast for homeowners, board members, and community leaders who want more than just rules. They want connection, clarity, and a community that actually works.
Our mission is to help you unlock the full potential of your neighborhood, whether you’re navigating conflict, leading with purpose, or just trying to figure out what those HOA fees actually cover. If you care about where you live, and who you live next to, this is your space.
Hosted by community expert Denise Haas, Hey Neighbor dives into the real stories and behind-the-scenes truths of HOA life. Each episode, we explore the issues no one talks about but everyone deals with, from neighbor disputes and boardroom drama to financial transparency and shared wins.
Whether you're new to HOA life or a seasoned board member ready for change, this is where real talk meets real solutions - with just enough laughs along the way.
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[00:00:00] Tressa Bishop: My neighbor has a fire and it impacts my unit. Well, I didn't do anything wrong, and I don't wanna submit a claim. So your carrier has to cover my unit. Sounds like, why wouldn't they? But my property is not scheduled property on their policy, so they're not going to cover me on a, you know, the property on the first party basis.
[00:00:22] Tressa Bishop: So now I get to sue my neighbor. To get them to pay for my damage, that is a tough situation.
[00:00:31] Denise Haas: I'm Denise Haas and this is Hey Neighbor, the podcast that dives deep into the real life issues of HOA living. The good, the bad, and the downright complicated. Ladies and gentlemen, welcome to another episode of Hey Neighbor.
[00:00:47] Denise Haas: You know, 'cause we like to talk all things HOA here. And today I'm super excited because this topic, particularly in Colorado, has been a hot one. And Tressa Bishop, who is the Senior Vice President at Alliant Insurance Services specializing exclusively in community association insurance, she holds the CIRMs.
[00:01:15] Denise Haas: Designation through CAI one of 125 or more in the nation and additional credentials such as her MBA, her CIC, her EBP, her A-B-C, L-M-N-O-P, Q-R-S-T-U-V. Tressa advises boards and managers on risk management, budgeting and coverage strategy, and I would love to welcome Tressa. I've known her for quite a while.
[00:01:42] Denise Haas: She has handled some of our associations here at Five Keys, some that have been really distressed and insurance costs have been exceptionally high, and been able to take the time to analyze the governing documents, make sure they actually are getting the coverages that they need. And turn them around so that they're moving in the right direction.
[00:02:04] Denise Haas: So with that, welcome Tressa.
[00:02:07] Tressa Bishop: Thank you so much, Denise. It's a pleasure to be here. I'm excited for your podcast venture. I think the voices in this community, you know, we hear a lot of negative things about HOAs and insurance, so we have something in common. We do that. But things are, we'll talk a little bit, I'm sure today about, you know, things are on the upswing in a lot of ways.
[00:02:26] Tressa Bishop: Certainly there are still some challenges, but I'm excited to be here. Thank you.
[00:02:30] Denise Haas: Okay, so I'm gonna stop for just a minute because I kind of teased on all your credentials because people tell me I have the alphabet behind my name. What's the EBP?
[00:02:40] Tressa Bishop: It's the CAI, educated Business Partner distinction. So sometimes I leave that off of like signatures, things like that, because if they don't know CAI, the SERMs designation, the community insurance and risk management specialist.
[00:02:55] Tressa Bishop: That's the big, you know, sort of the big E, the EBP is just that we know what we're doing. Yeah. That's, that's about it.
[00:03:00] Denise Haas: So SERMs for you is like pcam for me. It's like where we went to write our thesis to get our PhD in our specialty. Yep. Yep. I love it. All right. Today we're gonna demystify HOA insurance for boards and homeowners.
[00:03:17] Denise Haas: We're gonna explain why premiums have risen and hopefully are starting to make a shift to the other side and what can be controlled. And we're gonna give a practical checklist to think about when you're doing your next renewal. All right, premiums up, down. Where are we at?
[00:03:36] Tressa Bishop: Again, it depends on where you sit in the marketplace.
[00:03:39] Tressa Bishop: So we've got, I know that's a, that's an easy answer to say. It depends, like the attorney do. There was the insurance
[00:03:45] Denise Haas: answer.
[00:03:46] Tressa Bishop: So those associations that are with an admitted carrier. So let's kind of just start. There's a couple that are branches of the insurance tree. There's the admitted side, which is, okay.
[00:04:00] Tressa Bishop: We're required as licensed agents and brokers to place business with admitted carriers. Okay? They pay into the state guarantee fund. That means if that company were to become financially imperil or become insolvent during the policy term, there are funds at the state level to pay claims for those policy holders.
[00:04:21] Tressa Bishop: They also have to file their forms and rates with the state. So they can't be as flexible as the non-admitted carriers. They typically have their own claims handling. They, you know, process and pick claims quickly. They're the preferred carriers. We'd love to place everybody with admitted. So those carriers, I'd say those premiums are still on the rise, but not nearly as much as they have been in the LA last few years.
[00:04:48] Tressa Bishop: Okay. Um, their biggest challenge right now is the cost of reinsurance. So insurance companies have to carry insurance for their risk because they don't have all the money in the bank for every single association, for example, that they insure. They have insurance on that for any large catastrophic type claims.
[00:05:10] Tressa Bishop: So admin carriers are still going up, you know? Yeah. But not, you know, we're looking at probably five to 7%. Versus two years ago it was 20 to 30%.
[00:05:23] Denise Haas: It was incredibly high. Mm-hmm. I mean, it made the news. Yep. Multiple times. People thinking that the boards had done something wrong, when in fact they didn't.
[00:05:34] Denise Haas: Mm-hmm. Along with having admitted carriers, non-admitted carriers are, are non-admitted carriers. Are they like the Lloyds of London?
[00:05:45] Tressa Bishop: That's what I, yes, that is the ex, and Lloyd's is the Lloyd's Syndicates. So the different companies that actually are in London that, that do take the higher risk properties, things like that.
[00:05:58] Tressa Bishop: It's not just Lloyd's, but yes, there are many carriers. Even a a, your everyday carrier, such as a Travelers or a Liberty Mutual, for example, they have non-admitted sides of their company. Right. So, um, that's interesting. Yeah. Yeah. So. But the non-admitted carriers don't pay into the state guarantee fund. So we do watch their financials pretty, make sure that they're on good footing.
[00:06:22] Tressa Bishop: And then number two is they don't have to file those forms and rates with the state. They can be a little more flexible, meaning they can throw something at the wall and see if it sticks, see if it can sell. They don't have to do an underwriting worksheet necessarily to get to their premium. They say, well, let's try this.
[00:06:39] Tressa Bishop: And then if it's not taken well, let's try that. So those premiums year over year, there's a lot more competition in that space right now. So those premiums are, we're seeing those come down generally, depending on what the limit of insurance needed is, things like that. But anywhere from a flat to a 30 to 40% reduction because you've got more carriers competing in that space for that business.
[00:07:08] Tressa Bishop: However, again, as I said at the beginning, we are supposed to place business with admitted carriers. We always look to do that, but so from a rate perspective, I say it depends, and that's why. But it's good news on the horizon. I really do believe.
[00:07:23] Denise Haas: So the admitted carrier versus non-admitted carrier, and I'm not meaning to harp on it, but there is one more clarification I wanna make.
[00:07:30] Denise Haas: So in an association's declarations is where the stipulations are in regards to insurance and what you are given to go. Tessa, I have this association they want to meet. They need to meet these guidelines. The A rated AAA rated B full alphabet thing best. Yeah. Um. Is that also specked in the governing documents?
[00:07:57] Denise Haas: Sometimes
[00:07:58] Tressa Bishop: the admitted versus not admitted is not typically mentioned at all. Okay. What is mentioned are no less than an A rated or at, or B or better. So the financial ratings, you know, a plus plus, A plus A, um, that kind of, and then go down into B. We don't have, we don't place business with. B rated carriers.
[00:08:21] Tressa Bishop: We just, we don't, um, a minus, you know, you might have a carrier that isn't an a a minus. Doesn't mean that there's problems, but we do, we do watch. In the last 10 years, I've replaced two policies for associations. That the carrier went from an A to an A minus then to a b plus. We didn't wanna stick around to see, you know, were they gonna slip any further.
[00:08:43] Tressa Bishop: So midterm, we replaced those policies sort of in the background. We notified the association, but it didn't, it didn't cost them any more money. We, you know, worked that out to make sure that there wasn't gonna be a problem with claims payments down the road.
[00:08:57] Denise Haas: And associations typically. I would like to say 99.9% of the time won't violate trying to get that type of AAA plus rating because the declaration is specing that.
[00:09:13] Denise Haas: But when this transition of insurance issues started happening, is it three years ago?
[00:09:22] Tressa Bishop: Four. Three. Four? Yep.
[00:09:23] Denise Haas: Three or four years ago. Did that cause associations to have to think a little bit differently or actually consider that?
[00:09:33] Tressa Bishop: Yeah. The big, one of the biggest changes, again, there's many, so I'm gonna simplify this Sure.
[00:09:37] Tressa Bishop: Just for the sake of our time here, but one of the biggest changes to go from an admitted carrier to a non-admitted, and this is sometimes specked in the declaration, is the blanket coverage uhhuh. So blanket coverage. In the property policy or hazard insurance, you know, sometimes it's listed as that in the declaration.
[00:09:59] Tressa Bishop: Blanket insurance. The idea behind it, and again, there are different types and different commercial insurance, but for association specifically, you have, say you have five buildings in the community, there's a million dollars each for replacement costs, just for simplification. And so you have a $5 million total limit of insurance.
[00:10:18] Tressa Bishop: So five buildings, million age 5 million total insurable values. Okay? If you have a blanket policy form that kind of goes over that 5 million. So if one of those buildings were to be demolished in a fire. But it really takes 1.4 million to rebuild it at the time of loss. You have the blanket I, so you have the full 5 million for that $1 million schedule.
[00:10:44] Tressa Bishop: You know, building that, that on the statement of values, it shows a million, but it's 1.4. You can draw from that full 5 million with that blanket form. Non-admitted carriers do not typically offer blanket. There are a few exceptions to every rule, right? So there might be a carrier that does offer blanket.
[00:11:03] Tressa Bishop: But we will ask then. So you're losing that flexibility. We will ask for margin clause, which is an additional 10, 20, 30% on top of each of those million dollar scheduled limits. Some carriers you can get it, you can purchase that, and then some you can't. And it really does depend on their spread of risk.
[00:11:26] Tressa Bishop: And there's more behind the scenes on the underwriting side, but that's a way that we try to combat that. We need to ask for that document that sometimes we can get it and sometimes we can't. It's been less available recently, I will say. So that is something that blanket limit, if you've got two carriers and you have an admitted option, maybe it's $20,000 higher than the non-admitted option you have to consider if there's a loss.
[00:11:51] Tressa Bishop: People only care about insurance when they pay the premium, and then there's a claim. So if you think fast forward to claim time. If you have that blanket, that's gonna be very helpful in case of a total loss to a building blanket different than umbrella. Correct. Umbrella is on the liability side. Mm-hmm.
[00:12:10] Tressa Bishop: So the, the blanket limit is on the property coverage and the umbrella. People ask, well, can we use that 10 million umbrella for the property? Only Those policies that are liability, that are under that umbrella are able to access those limits. It's a good
[00:12:27] Denise Haas: distinction though, to know and understand. Mm-hmm.
[00:12:30] Denise Haas: Yep. So again, back to what changed, what created, I won't speak on it, I'll let you speak on it. What created. Oh my gosh. And now we're into some very weird things being asked to be changed, for associations to be able to get insurance. So we'll do that. The second part, but the first part, yeah. What changed four years ago?
[00:12:53] Tressa Bishop: So we've done a lot on COVID, but it really did impact the insurance world. There's been a few that we're in, we're coming out of what's called a hard market. So with COVID. You know, you think about the shutdown of many parts of the world, right? And society in some some ways, and the ability to get goods and services, right?
[00:13:16] Tressa Bishop: So skilled labor materials, the cost of materials after a catastrophic loss, and the natural disasters didn't wait during COVID. So you have all of those things. We can all remember the news and all of the ships offshore off of California. Like yes, I know the materials out there or the cars are out there, whatever.
[00:13:36] Tressa Bishop: That all feeds into the cost of replacing damaged property or lost property due to insurable events. So carriers, they might have thought it was gonna cost a million dollars to replace a building if there was a fire. But it might have been 1.8 million because the cost of skilled labor, we were paying people to stay home in the United States, right?
[00:14:00] Tressa Bishop: So the cost of getting people to then come back out and actually do the jobs that needed to be done, and also the cost of the drywall and things like that, lumber, those are all things that drove the cost of that reconstruction. And then the cost of reinsurance, you know, the insurance that the insurance companies have to carry when reinsurers.
[00:14:23] Tressa Bishop: You know, would say, yeah, I'll sell you some reinsurance for these projects or this region. They hope they never have to pay it. They just like would like to collect that money. But with all of the large catastrophic losses, fires, wildfires, hurricanes, tornadoes, we've had all of those, you know, often in the last several years, those reinsurance carriers are having to pay out where they maybe hadn't had to the three or four years prior to that.
[00:14:49] Tressa Bishop: So those costs for the carriers have also increased double digits. And so carriers are, they're money making companies, right? They're for profit entities, they have shareholders, or they might be a mutual, but they have folks who, you know, are looking for them to not be in the red every year. So they've gotta balance, just like a business owner, you've gotta balance your cost versus your income.
[00:15:15] Denise Haas: Sure. I know when I've sat at board meetings and I've explained anytime there's a catastrophic loss, you need to realize how this impacts you because while you think this isn't anything that bothers me, 'cause that's thousands of miles away, it does. What about how that impacted and narrowed the market for people?
[00:15:37] Denise Haas: Let's talk Colorado because you and I are incredibly close to that situation. We had the marshal fire. We are notoriously known for hail, but then we get all these claims and the claims that happen extraneously on the rim to us, the Maui fire, the Florida stuff, the hurricanes stuff that happening, even happening in the world that comes back in and now.
[00:16:08] Denise Haas: We're trying to go back after insurance and our market is even narrower. For associations specifically, what creates that?
[00:16:20] Tressa Bishop: So the companies, there are very few just regional companies, right? There are a few regional carriers who really have, their exposure is very narrow, it's very small. Most are either national or international companies.
[00:16:36] Tressa Bishop: So again, they do look at different classes of business and they try to adjust their pricing and not, you know, maybe kill every one of their classes of business. But associations especially, you know, again, Colorado, we've got wildfire issues. We've got, as you mentioned, the hail. We can all name the dates off the top of our head of the major hailstorms, right?
[00:16:57] Tressa Bishop: For years from like 2015 and on. And so in that respect, you think about the. Roofing, the roofing situation and like how many, how many roofs, deductibles have fallen the re followed the trends of the higher losses paid out and all of that. But with regard to the insurance availability and affordability, the national international events do impact it again, because of the reinsurance, again, labor materials, all of that.
[00:17:29] Tressa Bishop: Now we're not. Yeah, the labor costs over in the Middle East if something happened isn't gonna impact our labor, but certainly drywall that's brought overseas, things like that, sure those costs are gonna impact, but the associations that have never had a claim, maybe they even replace their own roofs proactively.
[00:17:51] Tressa Bishop: Like there are a couple of those unicorns out there waiting for hailstorms to take their grid. Um, but. Those communities when they're hit hard, it is a gut punch. They're like, we've done everything right. We've had no claims. We're just caught in this. Can we self-insure? You know, we're the perfect, we're the perfect community.
[00:18:12] Tressa Bishop: So we do hear that too. But does that answer your question?
[00:18:15] Denise Haas: It does actually. You brought a word in a phrasing in that I do want you to talk about because of what's happened with the industry, what we're seeing a lot right now, and actually you're dealing with it in one of our communities, they had their governing documents rewritten to shift some of the insurance responsibility to the homeowners.
[00:18:39] Denise Haas: I think that I've heard that's becoming more common right now. It's like a little blip of a trend. So talk, you can go, I don't care which order you go. I want you to talk about a community self-insuring and what that actually really means because we have some people or communities who have gotten brave about it, and then we've had the communities who are going more toward the, let's shift some of that responsibility.
[00:19:05] Denise Haas: Can you talk about both of those?
[00:19:06] Tressa Bishop: Absolutely. So we'll talk about the more, I guess, the way you keep the community kind of looking the same as it was before. Maybe the governing documents common, you know, in Colorado, if you have just ver, let's talk just vertical boundaries. So town home style buildings.
[00:19:24] Tressa Bishop: But the association ensures the buildings because that's the way that the documents were written. So those associations, many of those. State that the association will ensure that the town hall units or the condo units, as well as the interior of the building and the structure, but the interior to the original specification of the way the first unit was turned over by the declarant to the first owner, not including owner upgrades.
[00:19:53] Tressa Bishop: We call that single entity or original specification coverage. So that's very common. I mean, any community written, you know. That was established in the eighties or nineties, you know, that's usually what they, we saw. So with that, it's hard to know, really hard to know interior wise how much we should be insuring for.
[00:20:12] Tressa Bishop: We have some great tools on hand and we do use those. Ultimately, it's up to the board to set the limits of insurance. Our state statute doesn't require an appraisal. Some governing documents say you may have an appraisal every three years, but no requirement. So that's something that on the legislative side could be something that could be looked at some point.
[00:20:33] Tressa Bishop: So those associations now are saying, how do we stop the bleeding on the association's insurance? What levers can we pull to impact this? Well, deductibles increasing is one, but you can only go so high before you put an undue burden on the owners. If there's common area property that's damaged, that's then gonna be a big expense to the association.
[00:20:55] Tressa Bishop: But then the interior unit coverage, if you don't have any horizontal boundaries between units, there's nobody upstairs, neighbor or downstairs neighbor, uh, because that's statutorily driven. You can look to change the declaration, make an amendment with your legal counsel to say, okay, the association is now only going to cover, we call it bare walls, so the unfinished circuses of the walls, floors and ceilings of the unit.
[00:21:22] Tressa Bishop: Nothing else inside. No kitchen cabinets, no valve fixtures. That allows us to say, okay, for the building, shell perimeter, you know, the interior walls with the plumbing, electric, and drywall only. So think,
[00:21:36] Denise Haas: turn the building upside down. Whatever shakes out we're not covering.
[00:21:39] Tressa Bishop: And also we're not covering the finished flooring, the light fixtures, the kitchen.
[00:21:46] Denise Haas: Oh, so even that analogy doesn't work perfectly. Getting down to,
[00:21:49] Tressa Bishop: yeah, truly getting down to bare walls. Okay. So that is a way, that's a lever that can be pulled. But again, you need to make sure the communication with the owners is clear, often and upfront, because that policy. As soon as that is in effect, that amendment takes place.
[00:22:07] Tressa Bishop: If you need the owner approval 67% or whether it can be done by board resolution. I've seen it done both ways. Yeah. You need to make sure that if there's a loss after that, the owners have gotten their insurance up to far with that full interior finish, so that's one lever that an association can pull.
[00:22:27] Tressa Bishop: Okay. We've. I've been at. If you have horizontal boundaries and you're a post July 1st, 1992 community in Colorado, you have to follow that, that information. In Kiowa, sometimes I hear different interpretations by adjusters and attorneys, but as we sit here today, it's not clear whether or not it's truly bare walls in a condo because they talk about unfinished flooring, you know, walls and that kind of thing.
[00:22:55] Tressa Bishop: Right? But they don't mention. Kitchen cabinets and bath fixtures and things like that, just talks about owner upgrades. So my hope is that we'll improve in the next year or maybe step again,
[00:23:06] Denise Haas: or that managers, if you're listening, when you're having your governing documents rewritten. I always recommend, and this was a tip I got from Tressa who said, Hey, why don't you let me take a look at that to make sure that it's written, to make it legible.
[00:23:25] Denise Haas: So everybody understands what needs to happen, and you actually have a solid document that can be followed going forward
[00:23:33] Tressa Bishop: for the adjusters on both sides, the HO six adjuster and the association adjuster. And it makes everyone's life easier and people aren't upset because their interpretation was different as the owner versus the board.
[00:23:47] Tressa Bishop: So moving on to a more aggressive change that we're seeing happen in some communities. Is the going from the association master policy on the buildings to having each owner individually ensure their unit, their attached unit as a single family home basically. So if you have a patio, homes like true patio homes of single unit buildings, that's fairly easy to do.
[00:24:15] Tressa Bishop: You still have to work with the attorney. You still have to make sure that you're letting people know what their responsibility is because there's not a shared wall in that case. To move from where there's duplexes, triple, you know, 3, 4, 5 units attached and do that. You can't, it can be done. You really have to think through the shared wall situation, the shared roof line situation, and that sort of thing.
[00:24:41] Tressa Bishop: So we've seen where this has been done successfully. With a lot of thought. You have to, you know, changing that type of thing. You typically would also need to notify the mortgage folders because you're fundamentally changing what that owner is required to obtain and they mm-hmm. They need to be aware and approve that, as well as, um, we've seen where there's been a large buyer or a hail claim within those communities.
[00:25:06] Tressa Bishop: So tricky part is you could, nobody thinks this will ever happen to them, but you have a next door neighbor. So you've moved to where I'm in a three unit building. I'm the middle unit, got my insurance for a single family home for my unit, an HO three policy, and my neighbor has a fire and it impacts my unit.
[00:25:27] Tressa Bishop: Well, I didn't do anything wrong and I don't wanna submit a claim. So your carrier has to cover my unit. Sounds like, why wouldn't they? But my property is not scheduled property on their policy, so they're not going to cover me on a, you know, the property on the. First party basis, they might cover under the liability, but probably only if my carrier subjugates against their carrier.
[00:25:54] Tressa Bishop: And again, depending on if that Personed has insurance, they may not. So now I get to sue my neighbor to get them to pay for my damage. That's, that is a tough situation. The other thing is the hail, because we mentioned, you know, obviously Colorado, the hail prone state. If you have a community of, say you have 80, 80 units in the, in the Townville community, you've changed.
[00:26:17] Tressa Bishop: So the owners are responsible for their insurance. Didn't change the maintenance responsibility on the buildings though. Let's have that little asterisk there. And so the hail happens and you have people have their carriers come out and fact, you know, most of them agreed that the roofs are totaled. You have a couple that say, Nope, your roof's fine.
[00:26:37] Tressa Bishop: Not covering that, not a covered claim. And a couple that just don't, they don't have any leaks and they're not submitting a claim to their carrier. Yeah, okay. That's a whole mix that you can think about all the things that could go wrong, but then you also have 20 roofers in your community for an extended period of time.
[00:26:53] Tressa Bishop: Just all the, we know how it is in a community where there's one roofing contractor that's hired, but you can picture some of the things that might happen when you have that situation. And then one other thing on that, a a neighbor who. Didn't submit a claim, didn't have any issues, didn't have any leaks.
[00:27:13] Tressa Bishop: Fast forward 18 months, they're, they have some leaks. HOA, you need to maintain my roof 'cause that's your responsibility. And now you get a fight with them over the fact that it was probably needed to be replaced because the hail loss and it's not a maintenance issue and you're gonna. It's just gonna be, you know, you gotta think about those legal costs down the road and all the other things.
[00:27:32] Tressa Bishop: So I think you're ready to move on. Yeah. I see you're
[00:27:34] Denise Haas: liking. No, no, no, no. What you're creating is a lot of additional questions in my head and I'm going, oh my gosh. We could have six interviews, you and I, that that is true. So that, that scenario is the one where the association has rewritten the declarations and pushed more responsibility to the homeowners.
[00:27:56] Denise Haas: But what's self-insure? Cool. And how do you prepare for that?
[00:28:00] Tressa Bishop: Yeah. So what, when we say some associations call that, what I just described as self-insurance, that's not what that is. Oh, that is single family home insurance for each owner. Well, we talk about having a community, wanting to self-insure uhhuh.
[00:28:16] Tressa Bishop: They actually want to, instead of paying these exorbitant premiums, they wanna be able to put 'em in the bank for the rainy day so that if something happens, they have the funds, they don't need a carrier, why would we need somebody? The, but the reality of that idea is I love the, the sort of buckle down and do it ourselves kind of idea.
[00:28:35] Tressa Bishop: But you will not have anyone lending in that community, right? So number one, lenders do not do that, wouldn't fly. You have to be very financially sound and have a lot of capital resource put away and earmarked to be the your own insurance carrier. So there are captives and other vehicles. But again, even structuring a captive, which is basically being your own insurance carrier, but you have someone managing that and maybe you find a group of HOAs across the country, so there's a good spread of risk if they're all in the Denver area or they're all in the mountains or that kind of thing.
[00:29:16] Tressa Bishop: That's not, you may not be a big enough spread of risk to, you might use all your funds on one major catastrophic event. So, but really the lender issue is the biggest thing on the HOA side for truly like a self-insurance type of thing for an association. And then of course there's some states do allow that.
[00:29:35] Tressa Bishop: It's written into statute. Florida is one but's very specific as to what's allowed available, how that would work. And I don't know of any communities who have actually successfully done the
[00:29:48] Denise Haas: self-insurance thing. Well, that lending piece is huge. I have to tell you, quite honestly, I did not think of it from that perspective, so that was a good, that was good information for me.
[00:30:03] Denise Haas: If this conversation of, Hey Neighbor is making you wish you had a better HOA community, check out my company. Five Keys an HO, a community management company dedicated to unlocking the full potential of every HOA community we manage. Find out more about our Five Keys to community success at fivekeyscm.com.
[00:30:25] Denise Haas: Now back to the show. Talk to me a little bit about the HO six HO three policy. I would say, let's go to HO six first. Mm-hmm. So this is a common question. Homeowners, usually when we're in a meeting, we say, okay, insurance is renewed. Here's your certificate of insurance for the association. Take this to your insurance carrier to have them help you.
[00:30:57] Denise Haas: They really want us as a manager to tell them what they need to do. And we constantly are pushing back saying, uh, you have to have your insurance provider handle that for you. 'cause we're not in your situation. We don't know the specifics for you. But where this commonly happens, and I see this, I think I just had this conversation yesterday, was around a special assessment.
[00:31:25] Denise Haas: And through the years of my far too long doing this. We have issued some special assessments that have been for either a HA claim deductible or an insurance loss, and people call back and they're like, okay, my carrier's not gonna cover this. And they're upset because either it's the date of the letter or the date of the loss, or they don't like how it's worded.
[00:31:55] Denise Haas: What is some really good tips that homeowners can take from this, because this is where they commonly use it, is for this loss assessment coverage. Do you have any tips around that for the homeowners?
[00:32:09] Tressa Bishop: Yeah, there's a lot of changes on the HO six landscape, so with carriers, and they're all different.
[00:32:15] Tressa Bishop: There's no one set rule or requirement for the HO six carriers. Which is problematic. Talk about some of the problems and then talk about what I think a good solution may be and would be great if homeowners could get behind this in a way. And I'll talk about that in a moment. But, okay. So the helping a community through a special assessment now for us, a storm from last May, year ago May.
[00:32:42] Tressa Bishop: So again, special assessment was just made, I wasn't the broker at the time of the loss. We joined them in the spring this year. You think about the date of losses, May, 2024. The special assessment is late July, 2025, so the date of that special assessment goes to the owner of the property now. So anyone who moved in who wasn't a owner, they have the special assessment, right when we have a coverage gap, because HO six policies.
[00:33:13] Tressa Bishop: Typically either have the trigger for the HO six as you mentioned, is the date of the storm, the date of the law, the storm that caused the loss, which May, 2024, and then the date or the date of the special assessment, July, 2025. So those two dates are important. Some carriers, they wanna be the care, the same policy term to in order for it to be covered.
[00:33:39] Tressa Bishop: Well, how do you line that up even if you're an astute insurance buyer? That's not reasonable. That's not reasonable at all. So again, those policies, that's problem I have seen. And then I've heard at some of the town hall meetings before special assessments passed, some say, well now go get, go get war HO six loss assessment coverage before the special assessment comes out next week.
[00:34:03] Tressa Bishop: I've heard that too. Sounds great, and it used to work, to be honest with you. I'd say back in 2016, we saw carriers, people could increase it. Then the special assessment came through and they got the coverage. Well, carriers got, they got savvy to that. So there's kind of a walkout date, right? If you request the increase and then you put a claim in within 30, 60, 90 days.
[00:34:27] Tressa Bishop: Not gonna be covered because they know what you're trying to do, especially if the hail date was, or the storm date was way past or way in the, in the background. So those dates are problematic. One of the things I was talking to a friend who is an attorney, and he reminded me of something Minnesota passed, I believe is in 2023, statutorily that HO six carriers must use the date of the special assessment.
[00:34:55] Tressa Bishop: As their date to pay a claim for loss assessment. If we could get something like that in Colorado, that would really help out those owners who are stuck with a special assessment. It didn't need to live in the community. Or maybe they've changed carriers because they had a hundred percent increase from their last carrier, or they got dropped because they have a teenage driver and it was all related to their policy.
[00:35:21] Denise Haas: Can the current homeowner. Go back to the previous owner who owned at that time, to have them submit a claim. That owner
[00:35:32] Tressa Bishop: that owned at the time, May, 2024, in my example, is not being assessed. There's not a loss for them to have covered, right? Because the special assessment is to the current owner. It's not transferrable to the past owner, and so they would not have coverage under that.
[00:35:50] Tressa Bishop: What we tell managers and boards. As soon as you know that there is a chance that you will have a claim, you need to put that in the status letter. It seems like you're being alarmist. However, the realtor and the buyer, seller, they need to be able to work that out at closing so that somebody knows, okay, I may have a special assessment coming down the pike.
[00:36:15] Tressa Bishop: Oh yeah, they gave me a $10,000 credit at closing. Now, they still may not remember that when they get the bill from a special assessment, but that is a way that if somebody's selling and they need to get outta Dodge, they can at least make that owner a pull for something that they're not gonna probably have coverage for or hold it next to escrow until that happens.
[00:36:35] Tressa Bishop: And then if they do have coverage because their carrier covers it, then that goes back to the seller
[00:36:40] Denise Haas: that. It's really good feedback and thank you for sharing that. 'cause I think you just cleared up a lot of things for a lot of people out there. Good. Okay. Only because we are gonna come back and do this tomorrow because I have so many more questions that aren't even on my sheet today, but every time I talk to you, I want more.
[00:37:00] Denise Haas: But let's do a little, um, trusses, top three tips, how to avoid gaps between the master policy and unit policies.
[00:37:10] Tressa Bishop: Okay, back.
[00:37:11] Denise Haas: I'm doing this tonight
[00:37:12] Tressa Bishop: for a 406 unit community. Biggest you go girl. It's super important, but I would say top three tips. How to avoid a gap. Well, the broker of, you know, for the association should be providing documentation as far as what is the deductible, what may I be responsible for the in, in the coming year, right?
[00:37:33] Tressa Bishop: At renewal, we get information, in my opinion. Again, other people might have other opinions. I don't think that should be coming from the board, the management company or the manager. I think that should be coming from your insurance broker because again, if they, if it's accidentally the wrong information and then there's a problem later, they have errors in omissions insurance for being an insurance broker agent.
[00:37:55] Tressa Bishop: You as a manager or management company. You can't play insurance agent and get away with it on your professional liability policy, your errors and omissions, right? Let the experts be the experts. So that's one. So notification of what those deductibles are, making sure that that I, as an owner does. Wait, does
[00:38:12] Denise Haas: the certificate of insurance
[00:38:13] Tressa Bishop: work for that?
[00:38:14] Tressa Bishop: The certificate of insurance can be passed along, but no, I don't think that has enough information on it, to be honest with you. Okay. I don't think that it's reasonable for an owner to understand even what A five, it just says Wind hill deductible, 5%. They don't know what the heck that means. So they need something more descriptive and more English maybe it would be, well, sure.
[00:38:35] Tressa Bishop: So I do think that's something that the broker should be providing every year at renewal. So making sure that as an owner, you, you don't have a gap if you know that you have at least the amount for the all other apparel deductible on your coverage A, your building or dwelling portion, because. Okay. Loss assessment coverage, you need a certain amount and that should also be disclosed.
[00:38:58] Tressa Bishop: Loss assessment is typically used when all owners are assessed. Coverage a building or dwelling coverage is when less than all owners are assessed. So if I had a frozen pipe. You know, in my unit. Specific? Specific to a unit or a set of units? Yes. Yes. Okay. Let now owners, because again, there's specific language on that policy form for loss assessment.
[00:39:21] Tressa Bishop: So number one, disclosure of the deductibles that they may be responsible for, and then the making sure that the HO six policy has up to those limits. Water backup or sewer dream backup coverage on the, on the unit owner's coverage is huge and not often carried. It's an optional coverage. It's usually about 16 bucks a year for that coverage.
[00:39:45] Tressa Bishop: So if you are responsible for that $25,000 deductible because you had your hot water heater decided to uh, you know, to have a problem or you had a backup in your unit and you don't carry that optional coverage, your HO six carrier may not pay up to that 25,000 law deductible because you just don't have the coverage.
[00:40:06] Tressa Bishop: Or if you only have 10,000 of water backup. But the deductibles, 25,000 for the association and the loss is up to, or over that amount I've seen where the owner is out $15,000 because they didn't have a high enough water backup limit. So if they say, well my, my policy only offers 10,000, I'd be changing carriers.
[00:40:27] Tressa Bishop: 'cause $15,000 is a big amount to just stay with a carrier that doesn't meet this year's deductible requirements. So that deductible is really where we see the gap.
[00:40:37] Denise Haas: Ooh, that's good information. I hope
[00:40:38] Tressa Bishop: that was
[00:40:38] Denise Haas: three, but that's really good. No, that, yeah, I don't care. That was all good. Makes me wanna go home and check my own policy and I'm a single family homeowner.
[00:40:47] Denise Haas: If you could help a board be more proficient this year, what is one thing you would want them to know? So I was
[00:40:57] Tressa Bishop: just discussing this on an editorial committee on, um, for a CAI chapter, but I would love for. You know, there's different decades that different associations have different issues. So bill, year of construction, I mean, so that, that is a very true statement.
[00:41:15] Tressa Bishop: Yes. That's really good. So I'm writing something on that. So to kind of like, okay, if your association is billed between 1970 and 1990 and year actually 70 to 80, and then. 80 to 90 is really, there's unique situations there, but I would love for associations to know that even though you do not boards to note, even though you do not have maintenance responsibility inside of the units, you need to be keeping documentation on buildings, building elements that are inside of units.
[00:41:46] Tressa Bishop: It's not easy, but it's data gathering and it's legacy information that can help your broker help you when it's time to shop for insurance. The more detailed information we can provide to carriers, the more comfortable they get giving an additional credit. So underwriters can have up to a 30% discretionary credit for an account.
[00:42:11] Tressa Bishop: We're not leaving money on the table, so that's exactly right. That's why I ask them many darn questions. And I know I gather a lot of data when I'm shopping for an association, especially the first time, but we really wanna put your best foot forward. It would be like going, selling your house and just.
[00:42:26] Tressa Bishop: Putting on MLS, but not doing Zillow, realtor, all the things that social media now sells houses. So same idea in the marketing process. We don't just click a few buttons and get a quote. That's not how it works in commercial insurance. So I think that, I wouldn't hope that boards would understand that there is a need for legacy building and unit data, that it is important to sometimes undertake a project that impacts unit owners units for the good of the community and.
[00:42:56] Tressa Bishop: Yes you can is my answer because I've seen it done. You have to work with legal counsel. We have to look at the governing documents and the communication to owners in a town hall meeting. Do not block out your insurance broker and your attorney for those. Don't run those on your own. It's not gonna go well, and they're gonna be like this when you really do need it done.
[00:43:16] Tressa Bishop: So that would be the probably the biggest thing. And then loss control recommendations are not optional. I've had, you know, community where the loss control recommendations had some things that had to be done, and they're like, we're just not gonna do it. Can you just find us a new carrier? So if you get canceled for that and you have to go find a new carrier, we have to disclose why you are canceled by this carrier.
[00:43:40] Tressa Bishop: They might have more recommendations and it'll be more expensive to do it with the next carrier. And now you have an off cycle date with maybe your general liability from your umbrella, which is. Not acceptable for those carriers. So there's a lot more problems. Work with somebody who specializes in whatever niche of insurance you're purchasing because the body of knowledge, the ease of doing business,
[00:44:04] Denise Haas: it can pay dividends.
[00:44:07] Denise Haas: Tressa, you know I love you. Thank you so much for coming on. I would love it if you would be willing to come back again and have us do another 45 minutes to an hour, because I would like if you would come back and talk about. What's happening in the market with now? Insurance carriers are getting more particular about what we're doing and improvements that we need to make before they will even ensure, such as associations have to get rid of grills, change out breakers.
[00:44:35] Denise Haas: Aluminum wiring. Aluminum wiring is kind of an old one, but I just heard one earlier this week about now. It's how we track leases, so. I would love it if we could come back and have some more conversation, but for right now, I wanna say thank you. You gave some really important things for boards and homeowners to do, and if they're not paying attention to it, I'm sorry.
[00:45:01] Denise Haas: 'cause we were here to tell you first to really move in a different direction and pay attention. Protect yourself. You deserve it. You pay a lot of money to an insurance company. It's not if it's when you need it. 'cause eventually you will need it at some point in your life. And I want you to be able to get the best out of it that you can.
[00:45:22] Denise Haas: You've paid all that money for all those years when you need it. You want it to do everything that it's cracked up to do. Absolutely. So right. So thanks, Tressa.
[00:45:29] Tressa Bishop: Thank you Denise for having me. It was a pleasure and I always. Love to be reminded of things that are important to share with my clients too.
[00:45:41] Denise Haas: So ladies and gentlemen, rather than a neighbor to neighbor tip today, I'm gonna give you a “What the HOA?” I have had several people talking to me about, they wanna know some of the funny stuff that we deal with regularly in an HOA. So this is some of the. Just funny ha ha. Don't take it too seriously. In the heat of the moment, we have the most empathy for the homeowners who are going through it.
[00:46:10] Denise Haas: But when you get away from it and you look back, it can be kind of funny. So there was a time, gosh, I don't even know how long ago this was. One of the managers that I had worked with in another company, had a homeowner physically bring in. A bag of dog poop because she wanted us to do DNA on that dog poop and violate the neighbor or the owner of that dog.
[00:46:41] Denise Haas: But she wanted us to see that the dog was actually pooping on her lawn, and she wanted us to figure out who it was. Now in today's world, they actually do have DNA testing that you can do for dog poop. But if you live in an HOA. And for those that support HOAs, it is common for us to talk about dog poop every single day.
[00:47:06] Denise Haas: We talk about poop pools, parking. Those are the most common conversations we have every day. But I will never forget the look of the manager's face when she was handed this little bag of dog poop and asked to please take care of it and find out who this dog is and stop them from. Going to the bathroom on their lawn.
[00:47:31] Denise Haas: So that's today's “What the HOA?” I look forward to you joining us on another episode of Hey Neighbor,
[00:47:42] Denise Haas: thank you for joining us for this episode of Hey Neighbor, subscribe wherever you get your for more insights on building better communities together.