My California HOA forces us to purchase a Homeowners Insurance Policy?

My California HOA is trying to change the operating rule to force us to purchase a Homeowners Insurance Policy (including personal liability) after 12 years without such rule. Is this legal and valid according to Davia-Stirling Act Civic Code 1357? Please advice. Thanks.

Well, contrary to popular belief, board members are not always looking for kickbacks when making changes to HOA procedures. That is the sensationalist, uneducated, and unproductive response to board actions. I happen to have several years experience working for the largest and most respected HOA management firm in the state, and I now work for one of the largest and most respected homebuilders in the country, so I have a bit of experience to speak from. I will get to your specific question in a minute, but first I urge you to get involved with your HOA. Go to board meetings, learn what is going on. So many uneducated people are so willing to sit back and take stabs at the board of directors, when in truth they are usually just homeowners like yourself volunteering their time to try to do what is best for the community...and they do so in the face of accusations like the ones we saw in previous answers. Sure, there are bad board members out there. However, there are also bad cops, doctors, teachers, priests, etc. Support your neighbors (board members), become involved. Don't accuse from afar.

On the specific topic at hand, I have seen this issue come up time and time again. There are usually several factors at play when this occurs, and it usually occurs for the benefit of homeowners at large. I'm going to go out on a limb and say that you live in an attached home (condo or townhouse) as opposed to a single family home. I'm making this assumption because this issue typically does not affect detached homes. When an HOA buys a policy for attached homes, it can be VERY expensive. It is not uncommon for a policy premium for 150 attached homes to be in the $30-40K range per year. Now, often times, attached homes have water leak issues (from sinks, water heaters, roofs, slabs, etc) and claims get filed for such issues. Insurance companies hate this, because they are expensive, especially if they involve mold. So, insurance companies often will increase a premium as much as 100-300% if a community has a history of such claims. This means that an association that used to be paying $30K per year, now could be paying up to $90K per year. That is an additional $60K per year that needs to be divided among the 150 (for the sake of argument) homeowners. That is about $33 per homeowner per month additional just to get coverage. Plus, the HOA will often have to accept a deductible of $5-10K versus $1K just to be able to get the premium down to $90K. So now, a homeowner who used to have coverage at $16 per month with a $1K deductible through the HOA, is now paying $50/month for the same coverage with a much higher deductible. The new coverage is much more expensive and essentially useless to any homeowner that doesn't have $5-10K sitting in the bank to pay the deductible. So, what is the solution? Well, often times, homeowners can secure their own individual policy for as little as $15-20 per month with a deductible in the $500 neighborhood. And, when all homeowners have such coverage, the association's insurance carrier will often reduce the association's insurance premium. This way, everyone is covered, less premium dollars are spent, and deductibles do not skyrocket. This is only one example of a logical reason for such a policy change, but it proves that the explanation is not always kickbacks.

As far as civil code 1357, that applies to the notice required to be given when an operating rule changes, it does not address property (casualty) insurance requirements. In fact, the law does not specify a level or scope of coverage that an association must maintain with regard to property (casualty) coverage, only the other types, such as liability, etc. The place that you would find the specific requirements that the association had to maintain (if any) would be your CC&Rs. Assuming that the CC&Rs mandated certain coverage by the HOA, then the board would be unable to change that without a vote of the membership. Additionally, often times such a vote of the membership requires a super-majority approval and can require the approval of mortgage holders as well (the banks).

In summation, seek first to understand why they are trying to make the change. Then, check your CC&Rs to determine if they can make the change. Work with them, not against them.

I hope this helps, good luck.

Yes. If the motion successfully passes the HOA, it applies to you.

You agreed to that when you bought a deeded property.

The HOA cannot change any of the provisions of the Covenant without approval of the Homeowners. It is a Democracy, not a Dictatorship. All operating rules are called out in the Covenants.
Get together with your neighbors and kill this move before it starts. It is clear that someone on the board of directors is seeking to get a kick back from Insurance companies.

Our Association recently tried to limit the number of Rentals and some Organizaions do limit Rentals. It is a violation of basic Property Rights as spelled out in the Constitution.

Unfortunately, the HOA can enforce such a rule if passed. The sad part of it is, most people don't go to the meetings to make their voice be heard.

Before you raise to much of a stink, check with your mortgage carrier (if you are still paying) if you should already have such a policy. Depending on your loan and provider, home owners insurance is required to keep certain rates.