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Homeowner Associations » Commercial Liability

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).

 


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