Some of you may or may not know, but I also own an insurance agency, and I cut my teeth in that business. That means I learned everything about insurance from the time I could crawl, walk, lick an envelope, and file a folder.
And I am sharing that with you because, as your property manager, I can provide a whole different level of insight when it comes to your master policy as well as the insurance to your unit owners.
So today, I am giving you hints on how to save additional money by understanding your master policy.
Things to Remember When Changing Your HOAs Master Policy
1. Inform every unit owner
No matter what, if you ever change an insurance policy, make sure that you let every single unit owner know about it. You don’t want to change your policy or coverage and find out a unit owner may not be aware because that would be a gap.
So when there is a loss and that gap occurs, you, the board of trustees, and the management company might be liable for miscommunication of any changes.
2. Take note of the deductible
One of the biggest expenses is the deductible of an insurance policy.
When we say an expense, it’s not a direct expense. But when a loss occurs, you have a deductible amount. The deductible is the amount you pay as a building or unit owner towards that loss.
If it is lower, say $250, $500, or $1,000, more losses can occur because it is easy for a unit owner to say, “Hey, my loss is above this. I’m going to have the master policy kick in.”
And that’s the way it works. If you have a unit owner policy, it will only cover you up to the master. And the master policy is going to kick in. We don’t want that. We want to set that master policy as high as possible. The deductible, that is.
That way, if with $5,000 or $10,000, the unit owner’s policy might be a little bit more, but the actual policy for the building will be less. And that means fewer losses occur in fewer losses is a good day. If you have too many losses in a building, you will get kicked into bad rates.
3. Don’t forget about the premium
What they call surplus lines are non-voluntary. You don’t want that. Maybe the premium is higher, and the coverage isn’t as good. It’s just not a place you want to be as a condo association.
The higher the deductible, the lower the premium. That means fewer opportunities for owners to make small claims on it. If you have a policy that has been clean for five years, it is typically what they ask of.
If you can re-quote that out all the time, the opposite is if you have claimed all the time, no policies or carriers will want to quote that out. And then you will be stuck in that surplus lines market.
The Boston HOA Guarantee
Insurance policies can be a huge blind item of your budget. If you or anyone else you know is looking for a proactive property manager to be able to explain to you your insurance policies and master policies, look through them, and see what type of coverage and pricing you have so you can save money, please think of Boston HOA Management.
