Category Archives: Financial Management

Financial Management, HOA & Condo Management, Real Estate Insights

How Condo Associations Can Navigate Rising Insurance Premiums

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For condo associations, managing insurance costs has become an increasing challenge. Over the past few years, many associations have seen their premiums rise significantly due to factors beyond their control, such as increased claims, rising construction costs, and changes in the insurance market. Since insurance is a major expense in any association’s budget, finding ways to mitigate these rising costs is crucial for maintaining financial stability and keeping fees manageable for residents.

If your association is facing higher condo association insurance premiums, don’t panic. There are several strategies you can implement to help control costs while ensuring your community remains adequately protected.

Understand Why Condo Association Insurance Premiums Are Increasing

Before making changes, it’s essential to understand why condo association insurance is rising across New England. There are several key factors driving these increases. For starters, more frequent and severe weather events, fires, and liability claims have led insurers to raise premiums across the board. Even if these natural disasters don’t affect your immediate area, insurance companies still find it prudent to raise their rates in response. 

Speaking of raising rates, rising construction and repair costs play a hand in increasing insurance rates. Inflation, combined with the supply chain disruptions over the past few years, have made property repairs more expensive, further increasing the cost of claims.

By staying informed about the factors that increase insurance rates, your association can take a proactive approach to reducing risk and negotiating better rates.

Review and Optimize Your Current Insurance Coverage

A thorough review of your current insurance policy is an essential early step in managing rising premiums. Many condo associations find that they are either over-insured in certain areas or paying for coverage they don’t actually need. You can identify potential savings by carefully examining your policy without sacrificing essential protections.

Start by working with an experienced insurance broker who understands the needs of condo associations. They can help you assess whether your policy aligns with your property’s risks and financial situation. Comparing quotes from multiple insurers can also reveal opportunities for better rates or more favorable terms. Additionally, take a close look at the coverage limits – there may be overlaps between your association’s policy and individual unit owners’ policies, creating unnecessary expenses.

Regularly reviewing and adjusting your insurance coverage ensures that your association is only paying for what it truly needs. This proactive approach can help control costs while maintaining the necessary level of protection for your community.

Improve Risk Management and Property Maintenance

One of the most effective ways to keep premiums down is by reducing the risk of claims. Insurance providers often reward well-maintained properties with lower premiums. Some risk-reducing steps include:

  • Preventative Maintenance – Regularly inspect roofs, plumbing, and electrical systems to catch small issues before they become major problems.
  • Water Damage Prevention – Install leak detection systems, upgrade old plumbing, and encourage residents to report leaks promptly so they can be fixed before they cause expensive damage.
  • Fire Safety Measures – Update your condo’s fire suppression systems, ensure smoke detectors are functional, and maintain clear emergency exits.
  • Security Enhancements – Install security cameras, adequate lighting, and controlled access systems to deter theft and vandalism.

A well-maintained property not only reduces insurance claims but also helps preserve property values for residents. However, this can be a lot for a condo association to handle on its own. That’s why it’s imperative that you work with an experienced condo management company like Crowninshield Management. Our services range from security enhancements and fire alarm installations to property maintenance and emergency repairs. This keeps your condominium community safe and up to date, helping to reduce high insurance premiums.

At Crowninshield Management, we specialize in helping condo associations manage their financial and operational challenges. Our experienced team can assist with budgeting, risk management, and securing the best insurance solutions for your community. Contact us today to learn how we can support your condo association.

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Financial Management, Real Estate Insights

When It’s Budget Time!

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If your community’s fiscal year ends on December 31st, it should come as no surprise that soon your Community Manager and Board Trustees will begin planning for next year’s budget.

The preparation of an association’s budget is a detailed and lengthy process. They have a lot of work ahead of them.  Over the next few months, managers will be tackling the process outlined below:

  1. Analyze each current expenditure line item to determine the correct level of funding. This process must consider fixed expenses such as multi year service contracts; variable expenses such as increased master insurance premiums, increases in utility costs, and so forth.  This can be a time-consuming process which entails communicating with various municipalities, vendors, and contracts to determine if any cost increases are to be expected.
  2. Determine the appropriate Reserve Funding expense. A recent reserve study is an invaluable tool to help your community determine this expense and stay on track with the appropriate level of funding for future capital expense needs.
  3. Determine income level to fund expenses. Association fees, special assessments, late fee income, income from late fees, storage fees, parking fees, and laundry room income are all examples of income for communities.  Your community may use any, some or all these methods to collect income, but which should be “budgeted”?

Association fees and assessments are legally protected and should be included as should any other fees provided for within the governing documents.  Fees such as late fees, fines and laundry room income should not be included as income in a budget as funds generated from these fees may never be realized.

  1. Determine the difference between the budgeted income and budgeted expense. If the total expenses exceed anticipated income, adjustments will need to be made.
  2. Establish a balanced budget. This may be achieved by either raising the income level (this can be done through an increase in assessments, establishment of a special assessment to meet funding needs, or a combination of both to achieve the amount required) or re-assess expenditure line items to determine if some items may be reduced or eliminated from the budget.

As you can see, the process for creating a thorough and detailed budget can be complicated and should simply rely upon a percentage increase across the board.  If your current Management Company is not providing this detail for you, perhaps it’s time for you to give us a call.

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Financial Management, Legal & Compliance, Real Estate Insights

Master Policy/Homeowner Insurance Hurdles

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When condominium sites renew their current Association Master Policy with some adjustments, or when they obtain a new Master Insurance Policy, it is critical that they notify all unit owners of the changes.
A letter should be issued to assist with a contact for certificates of insurance and how to coordinate individual unit owner policies with the Master Policy.
The Master Policy typically covers all Common and Limited Common elements pursuant to the Condominium Bylaws, although there exists exclusions in the Master Policy coverage that should be considered when purchasing a homeowners insurance policy.
Unit Owner’s Policy
It is the Unit Owner’s responsibility to insure their own contents and personal liability. Additionally, homeowners are responsible for the Master Policy deductible. It is also strongly recommended that all Unit Owners purchase an “HO-6 Policy”. The Master Policy will have a deductible; therefore, unit owners should discuss the following with their insurance agent for the “dwelling” of their HO-6.

  • Please have your agent review the insurance section of the Bylaws of the Condominium Documents.
  • In case there is a loss which does not allow you to occupy your unit, you should consider obtaining “Loss of Use” insurance.
  • Should there be a claim that is not fully funded by the Master Policy’s insurance, you should consider obtaining “Loss Assessment” insurance. Please discuss this with your agent.
  • It is also recommended that Unit Owners speak to their Insurance Agent to include the HO-1732 endorsement, which broadens the perils insured under coverage A-Dwelling from “named perils” to “special form”.
  • It is recommended that unit owners making improvements and upgrades to their units (e.g. kitchen cabinets, expensive flooring, wall covering, fixtures, etc.) retain documentation of the improvements. It is important that documentation be kept so unit owners may recover replacement value.

Investor Units
Personal liability coverage and the deductible is the responsibility of each unit owner. This would include loss of rental income. We suggest that investors require their tenants to purchase an HO-4 tenant policy.
HO-6 Unit Owners Policy Exclusions and Limitations
There are some important policy exclusions or limitations that should be reviewed when unit owners are analyzing their own personal insurance requirements (i.e. Jewelry, Fine Arts, Business Property, etc.). In many instances, these exclusions or limitations can be modified or changed. Please note coverage and endorsements must be arranged through a unit owner’s personal agent!
The importance of insurance within a condominium cannot be stressed enough. It is important to be properly insured against all types of losses. The association should meet with an experienced commercial agent to discuss all types of liability and losses which may occur on their property. We recommend each owner sit down and speak with their own agent with a copy of the Master Policy insurance certificate to insure they are properly covered in the event of liability or a loss.

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