Legal Question in Real Estate Law in California

Cancelled Insurance by Home Owners Association

I own a condo and our association has recently

cancelled our earthquake insurance due to increased

premiums. The board members did not seek approval to do

this from the owners or poll the owners to see if we

would be willing to pay more in association fees to

cover the increased premimuns. As a private

individual I cannot obtain earthquake insurance for

the structure of my condo. The California Earthquake Auth. advised me that a commerical earthquake insurance policy is required and can only be purchased by the association. Living in California this is quite a concern to me, as the association reserve fund does not have enough funds to cover such an emergency. If my condo was damaged by an earthquake would I have the right to sue the association for the cost to repair/rebuild my condo, or in the case where they did not want to rebuild, provide me with the current market value of my home since they cancelled the insurance without my permission and I have no alternative means to obtain this insurance elsewhere?

If those are my rights should I send a registered letter to the association advising them of my rights.

Thanks for your help


Asked on 12/29/05, 9:31 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Cancelled Insurance by Home Owners Association

Or, what if there were an earthquake and everyone else's condo was severely damaged, but yours survived. Everyone else would sue the association, which would lose, and since it would otherwise be broke, it would assess everyone $475,000 so it could repair the other condos at $500,000 apiece. Either way, you're a loser. Under this scenario, in a sense, you're worse off.

I do not know whther the HOA is required to buy earthquake insurance. This may depend upon your agreement or maybe a requirement of some financing used to build the place.

I'm pretty sure there is no law requiring an HOA to buy and maintain earthquake insurance.

It seems to me your most obvious solution is to get over 50% of the owners to agree with you, and present the HOA with a signed demand. Ultimately, these are democratically-elected bodies, and either they comform to the majority desire, or they get replaced by directors that will.

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Answered on 12/30/05, 12:36 am
Carl Starrett Law Offices of Carl H. Starrett II

Re: Cancelled Insurance by Home Owners Association

California law does not require HOAs to carry earthquake insurance, although failure to do so is a horribly bad idea. The association is legally required to maintain and repair the common areas and it would have to pay for repairs from the reserves and from assessments if there was no insurance.

First, I would review the CC&Rs and other governing documents. Sometimes the governing documents will set minimum insurance levels that the HOA cannot ignore. If the governing documents say nothng about earthquake insurance, then you should start gearing up to either petition the board to reinstate the earthquake insurance and/or run for the board on a platform of reinstating the insurance. The board of directors is democratically elected, so everybody has a voice.

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Answered on 12/30/05, 12:52 am


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