We are facing a crisis in the California community association industry, and many folks aren’t even aware. But, believe me, they will know soon enough. Due to the increased risk of wildfire in California, and the high expenditures made by insurance companies (approximately the same dollar figure as TWO Northridge earthquakes over the past 5 years), there are fewer and fewer carriers willing to cover properties that might experience wildfire damage in California. Do you remember your high school economics class? Supply and demand? The fewer the carriers – the higher the cost.
You might be thinking, okay, so it’s more expensive. Everything is more expensive right now. Those HOAs can handle an increase. Our assessments are already high and HOAs have a ton of money. Right? They can handle an increase.
This is where it’s helpful to remember that an HOA is a community of homeowners who collectively help each other be as successful as possible. They each pay their “fair share” of the expenses needed to take care of their homes. When insurance becomes not only expensive, but also UNAVAILABLE, what then? Suddenly, all of those people are faced with expenses they could never have anticipated. And, even worse, what if they are unable to GET insurance! If their home burns down, they will be homeless. No help from insurance to rebuild the place their families sleep at night.
Here is a specific example from a homeowner in Trabuco Canyon, CA:
“My HOA in Trabuco Canyon, 92679, has seen a 2,000% Increase in Insurance Costs related to Fire.
In 2020, we paid $40K for insurance, in late 2021 our insurance was increased to $775K and we are UNDERINSURED with only 30% of the insurance coverage we need for our HOA.
I want to ensure our community is involved and also that our situation is known.
We have more than 200 families at risk of losing their homes if the massive insurances increases continue or are not resolved. We have already lost much of our reserves, as we have had to pay massive insurance premiums. This could soon bankrupt our HOA.”
This is a real concern affecting the 13 million Californians living in 3,727,000 homes in 50,000 community associations.
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Meanwhile, please let the California Insurance Commissioner’s office know that this is NOT OK, by responding to our CALL TO ACTION here.
We are all better together. And right now, we need everyone who can to show up and make your voice heard.
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