What happens if our HOA can’t find insurance or our policy is cancelled?

A lapse in the master policy creates problems on several fronts at once. Lenders: mortgages on units typically require the association to maintain coverage, and a lender can force-place coverage at the association’s expense, which is normally more expensive and narrower than what the association would buy itself. Sales and refinancing: owners may be unable to sell or refinance without evidence of adequate master coverage, which tends to surface quickly and creates pressure on the board. Uninsured losses: damage to common areas or a third-party claim during an uninsured period falls to the association, and ultimately to owners through a special assessment. Board exposure: operating without the coverage the governing documents require can create exposure for the association and its board. Whether it also breaches a legal obligation depends on the governing documents and on current law, which is a question for the association’s counsel rather than for a summary here. If a carrier has issued a non-renewal or a policy has been cancelled, tell us as early as you can. Options in a difficult market can include the standard admitted market, surplus lines, and the FAIR Plan, and the earlier we start the more room there is to work.