Insurance Memo

All the major insurance carriers who sell policies to HOAs (like Wind Stream) are moving to a 2% deductible for wind and hail damage.  Your HOA Board will almost certainly be forced next year to buy a policy with the 2% deductible.  Otherwise the Wind Stream insurance premium for 2016 and beyond could easily be over $100,000 per year — and that’s if we would even be able to get insurance.

WHY?  Because Denver unfortunately has a lot of history of major hailstorm damage.  Also, Wind Stream has actually had two hailstorm damage losses in its history.   If hail hits us hard again, under a 2% deductible scenario, this is what WILL HAPPEN:

Assume the entire Wind Stream property is worth approximately 40 million dollars, which is just a rough estimate of our current  market value.  A devastating hailstorm hits.  Our 2% deductible (the money we must pay before insurance takes over for the balance of the loss) would be $800,000.  That means we would be forced to have a Special Assessment to cover the $800,000.

The required payment of $800,000, divided by our 234 units means that each owner would be required to pay a (one time) Special Assessment of $3418.  This is separate from — and in addition to — the normal monthly HOA dues.

So — how do you protect yourself financially in case disaster strikes Wind Stream?  The answer is simple, and surprisingly inexpensive.  Call your insurance agent to discuss adding something called “Loss Assessment Insurance,”   It is designed to pay your portion ($3,418 in this example) of the Special Assessment.   Many of your neighbors already have Loss Assessment Insurance, and you will probably want it to cover at least $5000 per occurrence.

Call your insurance company ASAP and get this cheap and important coverage added to your policy.