In November 2021, we posted an article related to insurance policies and the cost-shifting provisions that we were then starting to see a number of Associations adopt into their governing documents. A link to the article is here: While the information in the 2021 article remains relevant, the insurance industry is continuing to evolve and is cracking down on Associations that have filed multiple claims, which in turn is putting pressure on homeowners.

In the last two and a half (2½) years, we have continued to see a trend of more Associations adopting cost-shifting provisions that push uninsured amounts to the individual owner. Typically, these cost-shifting provisions are related to damage that is caused by anything located in an individual unit or caused by misconduct of a unit owner. Such language may look something like the following:

Liability for the amount of damage within the limits of any applicable Association insurance deductible, or otherwise uninsured by the Association, shall be the responsibility of the individual Unit Owner. . . .

Arguably, the biggest problem with these cost shifting provisions is that they incentivize Associations to substantially increase their deductible amounts. Since 2021, we have seen Association insurance deductibles skyrocket. It is no longer uncommon for an Association to carry an insurance policy with a $25,000 or $50,000 deductible.  As such, it is absolutely crucial that owners be aware of their Association’s insurance policies, remain diligent in insuring their own home, and carry an appropriate individual unit or homeowners insurance policy that will cover these cost-shifted amounts.

We work with many clients that have suffered unit damage and need interpretation of their Association’s governing documents related to such insurance provisions. Many of these clients find themselves having to bear the insurance deductible and otherwise uninsured amounts, which they are unprepared to do because they do not carry an appropriate individual homeowners insurance policy. Don’t fall victim to the rapidly evolving insurance landscape by failing to properly insure your home.  However, if you find yourself in need of interpretation of your Association’s insurance provisions, please reach out to an attorney before you pay assessments that you may or may not be obligated to pay.