Insurance 2019 Letter

Dear Chinquapin homeowners:

This is a very important notice about changes that you need to make to your HO-6 insurance policy as soon as possible. This is the policy you should already have to cover your personal belongings at your unit, deductibles and any aspects of your unit that are not covered by the master property insurance policy carried by the Association.  All unit owners should have ‘Coverage A (building)’ at a minimum of $100k in their HO-6 from this point on.

You should contact your broker as soon as possible to obtain this extra coverage. If you or your broker needs further interpretation or information they should contact the CHOA broker, David Gordon, at

Toll Free:  877-877-7755
Bus:  650-654-5555 ext 6972
Direct Fax: 650-654-5551
[email protected]          

As the Board and the Insurance Committee feared in the Fall, as we went out to obtain the annual renewal of the set of policies carried by the Association, the market for property insurance has become extremely tight. As a result of the latest set of wildfires in California, in Northern California in particular, and most specifically in mountain woodland settings, many insurers have withdrawn from this market altogether and those still offering coverage are imposing stringent new conditions.

Our request for bids for 2019 insurance was rejected by over 30 insurers and insurance programs, and after a strenuous search we were able to obtain only one for 2019. This has been accepted by the Board, but the property policy comes with two major new restrictions: (1) the deductible for all property damage claims was raised to $100,000 per occurrence (it had been $50,000 for water damage and $10,000 otherwise); (2) the maximum coverage per occurrence was reduced from $1 billion (pooled with any other HOAs covered by the same program) to $50 million (but for Chinquapin alone).

The Association is required under the CC&Rs to carry property coverage at replacement cost for the entire property, including the common area structures and facilities, if it is available and if the Board considers the price acceptable. It was the agreed opinion of everyone in the insurance and construction industry who we consulted that $50 million is far too little for Chinquapin. We therefore sought supplemental insurance (what is called in the industry ‘excess coverage’) and were able to obtain another $75 million of property coverage, for a total of $125 million. To put this in perspective, in the case of a fire destroying everything on the property, and if all of the insurance proceeds were applied only to the residence units, it would provide just under $400 per sq. ft.

This comes at a steep cost. The cost of insurance to the Association has more than doubled from 2018 to 2019. We have to hope that there are no major wildfires in Northern California on the scale of the Camp Fire in the next year or two and that insurers decide that they have exaggerated the risk.

The Board and I want to thank especially the other members of the Insurance Committee, all of whom are homeowners who have insurance industry career experience, for their help in dealing with this issue over the holidays – Bryan Costello and Chuck and Heidi Lanham.

Anthony Miles
Director, Chinquapin Homeowners Association
Chair, Insurance Committee