Homeowner Associations »
Commercial Liability Insurance: Frequently Asked Questions
Question: How long does it take to get a quote?
Answer: Unlike auto insurance, each association is different so there
is no standard of risk. Therefore, each commercial property submission
is reviewed independently and rated individually. Typically,
steps include property inspection, applications, submissions
to markets, review of place history, and release of the quote.
The entire process should take 20-30 days to complete.
Question: Does my association need to maintain Liability Coverage?
Answer: Yes. California Civil Code 1365.9 requires it.
Question: My Association had no claims, why did our premium increase
this year?
Answer: Unfortunately, claims are just one factor considered by
a carrier to determine an association’s premium. Claims paid out
on an entire class of business can have an effect as well. For
example, if there is a large catastrophe, such as a hurricane
or earthquake, the carrier must make up for the claims they pay
out, whether or not your particular association was involved.
Another factor not often considered is the Stock Market.
An Association’s
premiums are invested by the insurance company during the policy
term – including investments in stocks and bonds. The returns
on those investments are often used to keep the premiums low.
If those returns are poor, however, it may cause the rates to
reflect those poor returns.
Question: How do I keep my premiums as low as possible?
Answer: Most importantly, show the carrier you are not a risk. Prevent
claims and be proactive. Inspect the premises for trip-and-fall
hazards and eliminate them. Replace worn components to prevent
a future claim. Keep the Association well-maintained. Also,
accepting a higher deductible amount will lower the premium.
Question: The Board of Directors has Directors and Officers coverage.
Why should we purchase a General Liability policy if that
policy will cover the association?
Answer: The Directors and Officers policy specifically excludes bodily
injury and property damage; two elements that are very important
to maintain coverage for, and two elements that a General
Liability policy picks up. In addition, California Civil
Code 1365.9
requires it.
Question: Why is my carrier non-admitted? Are they disreputable?
Answer: Many times a broker just cannot place coverage with an admitted
carrier, and must look to non-admitted carriers as replacements.
This is not necessarily a bad thing. Non-admitted carriers
are just as reputable as admitted carriers, having to pass
the same
rigorous rules and regulations within the state they are
admitted in (a non-admitted carrier may not be admitted in
California,
but must be admitted in another state).