As an insurance broker, our job is to find appropriate insurance coverage at the best possible rates for our insureds. With access to dozens of insurance carriers, ABI Insurance can find coverage for most community associations in Oregon and Washington. This includes associations that are difficult to place. Our appointment with carriers who offer preferred policies (also called standard policies or admitted policies), as well as carriers who offer surplus lines policies (also called high-risk policies or non-admitted policies) makes it possible for ABI to find coverage for most associations, even those in the high-risk market.
Whenever possible, securing admitted policies for your association is ideal. Admitted policies typically offer the most comprehensive coverage for the lowest premiums. Another benefit is that carriers who write admitted policies must comply with state laws set by the department of insurance in the state where the policy will be written. The state regulates admitted policy forms, financial requirements, and the rates these carriers can charge. Carrying an admitted policy is a requirement of most states unless an association does not qualify. Most states require proof of “diligent effort” from a broker to place an association with a carrier admitted by the state before they will allow a non-admitted carrier to write a surplus lines policy.
The International Risk Management Institute (IRMI) defines surplus lines insurance as “…coverage lines that need not be filed with state insurance departments as a condition of being able to offer coverage.” Carriers that sell surplus lines policies in a state where they are not admitted are not subject to the same regulations as admitted carriers. This allows them to offer policies that are more specialized to meet certain demands, as well as charge significantly higher rates to justify insuring high-risk communities.
IRMI states, “The types of risks typically insured in the surplus lines insurance markets can usually be categorized as risks with adverse loss experience, unusual risks, and those for which there is a shortage of capacity within the standard market.” Associations that often have difficulty getting a quote for an admitted policy are those with costly or frequent claims within the last five years or those that have qualities or characteristics that most standard carriers decline to insure. Examples include:
- Associations located on the coast or in wildfire zones
- Those with galvanized plumbing or Stab-Lok electrical panels
- Associations with buildings over four stories that are not sprinklered
- Associations that were built over 30 years ago
Although surplus lines policies are often more costly than admitted policies, they can still be written to comply with an association’s governing documents and can keep an association from going uninsured. Your association’s agent can advise on what types of policies the association qualifies for in the current insurance market.
How Your HO6 Policy Works with the Association’s Policy
