PRESIDENT'S MESSAGE By Dave Peterson, Board President
2024 Budget. The board approved the 2024 budget at the September 20 board meeting. As I mentioned in last month’s Breeze, the board opted to limit dues increases to 20% in order to avoid a member vote, primarily out of concern for our ability to get the 50% member quorum required for a valid vote. Cove budgets include extra dues for their additions, but all coves remained within the 20% threshold. HOWEVER, as of the date of the board meeting, we did not yet have a bid for insurance, so we plugged in a 35% increase assumption, which proved to be wrong (see discussion below).
executive session on Thursday 9/28/23, and voted to bind the coverage. We were between a rock and a hard place, as coverage expired 9/30, during the weekend. The board held a special open session meeting on 10/2 to explain the decision, and to discuss further actions needed to deal with this. Our brokers think it’s possible to buy up our limit to $65M (60% of total value), but is less certain about the market’s ability to insure us to the full 100% value. But they’re working on it. The board will consider increasing coverage at future meetings, as proposals become available.
The good news is that the upper limit in coverage does not mean fractional coverage of losses. Each building has a given dollar value in the policy (the sum of which Insurance. The association carries insurance on our adds up to $109M), and losses are fully covered on a first common facilities, things related to running the come first served basis, not to exceed a total of $25M in a organization, and for townhome buildings. The bulk of year. An example would be if we have 8 buildings valued the insurance costs are borne by the coves. About the at $3M each and all burn completely in 2024, they would end of August, our carrier cancelled us, which started all be fully insured for replacement. So our real exposure a scramble for our broker to find a new policy before due to the top line shortfall, is if we have a catastrophe our coverage lapsed on 9/30/23. Unfortunately, the that involves more buildings. Nevertheless, the board insurance industry has somewhat imploded in California, is working with staff and brokers to address this issue. and all insureds, not just HOAs, are getting the shocking Those in the know tell us that this will be a several-year news. Our broker contacted 47 companies, and 29 industry shakedown. In the process of dealing with this, declined immediately. Of those that responded, the best the board will be reaching out to members for input, proposal was an amalgam of carriers for various line and we may be putting the issue of additional coverage items, at a cost of over double what we paid last year. out for a vote. In the meantime, the board authorized And here’s the kicker: our building coverage maxes out an emergency special assessment for the coves to cover at $25M, which is far less than the total structure value their insurance budget overrun; our 35% increase guess of $109M. The board received the bid at an emergency in the 2024 budget didn’t cut it. Keys Breeze
|
OCTOBER 2023
|
18
