By: Ryan Ponce On: February 20, 2024 In: Advice Comments: 0

In recent years, California’s insurance landscape has undergone significant changes. These changes did not exclude condo owners or even coverage on entire buildings. Let’s break down what you need to know about these changes and how they affect your property.

The Exodus of Insurance Companies: In 2023, we witnessed a major shift as some of the nation’s largest insurers, including Allstate, State Farm, Nationwide, and Farmers, decided to stop offering policies in California. This retreat was mainly due to frustrations with Proposition 103, a regulation passed in 1988 to protect consumers from random insurance rates and ensure fair, accessible, and affordable insurance. However, during the pandemic, the California Insurance Commissioner did not approve any rate increases, prompting these companies to pull out of the state. Since January 2024, some companies have returned, but with large increases to premiums.

Impact on Condo Insurance: Condo buildings have seen sharp increase in insurance premiums for the HOAs policy. The main culprit for damage in high-rise buildings is water – from common lines, leading to significant expenses for repairs. Many insurers have started requiring higher deductibles for flood incidents, sometimes as much as $50,000 per claim. Consequently, Homeowners Associations (HOAs) in downtown areas are shifting the liability for damages to condo owners, even if the cause originates from another unit. This change means higher costs and responsibilities for condo owners, affecting both their coverage needs and premiums.

How This Affects You

Increased Costs and Liability: As a condo owner, you may now face higher insurance premiums and deductibles, especially for water damage. The responsibility for damages caused by water leaks, even from common areas, might fall on you, increasing your financial risk. It is important to understand the HOAs policy, their rules and regulations, and how those impact your required coverage.

Future Insurability Concerns: The changes could also impact your condo’s insurability in the future. If your property has a history of floods, finding an insurer willing to cover your home could become more challenging. Prospective buyers might also face difficulties insuring the property, which could negatively impact its marketability. As we navigate these changes, it’s crucial to stay informed and consider how these insurance shifts impact your property and financial planning.

If you have any questions or if you would like to discuss your HOAs current policy and how it may impact you, I would be happy to help. I am not an insurance professional, but I have a fairly good understanding of the different scenarios Downtown San Diego homeowners are facing. I also have some great insurance brokers I would be happy to connect you with that will have a much deeper understanding of the topic.

And Always Remember, It Matters Who You Work With!

Give me a call today at (619) 228-6790 or email me at Ryan@livingthesandiegolife.com for more information or to schedule a tour of the neighborhood!