HOA Insurance Jumps 24%
- Los Lagos Vistas
- 2 hours ago
- 2 min read
The HOA’s property and liability insurance was renewed with a $26,128 rate increase to a total $109,796 premium, up from $83,668. The increase was caused by slight increases in replacement cost valuation from general inflation and other slight increases plus a significant increase due to an open lawsuit, the insurance broker said.
The HOA is challenging a “slip-and-fall” lawsuit because of circumstances surrounding the incident.
The insurance broker also noted a slight increase in automobile insurance and the expiration of a three-year crime-insurance policy that was renewed. The broker recommended increasing crime coverage based on a formula of HOA assessment income and protection of HOA reserves.
The HOA Board discussed options to reduce the premium, such as increasing the deductible to $50,000 from $25,000 and shifting coverages. However, the increase could put HOA homeowners at risk because it would require them to increase their private insurance coverages and deductibles to cover possible gaps. Although personal insurance rate increases likely are minimal, the renewal deadline didn’t provide enough time to allow all homeowners to adapt to the higher coverage brought on by the pending lawsuit.
Homeowners are responsible for personal property and liability insurance for their condos.
The HOA's added crime insurance protects it from losses caused by financial fraud, computer fraud, and what’s called social engineering fraud, or fraud by trickery.
The HOA’s workers compensation insurance renews in April under a separate policy.
In Arizona, state law requires HOAs to maintain property insurance on common elements plus liability insurance. Property insurance must cover all risks of direct physical loss. Liability insurance must cover all occurrences commonly insured against for death, bodily injury, and property damage. Total coverage must cover at least 80% of the complex’s actual cash value.
Because of CC&R constraints, the HOA is paying the insurance premiums in deficit, meaning cash must be used from reserves or other accounts to cover costs. The HOA can only raise assessments by 10% without a homeowner vote. The 2026 per-unit insurance assessment was $330, but the total assessment should have been $476 to cover actual costs— a $146 deficit.
