Guide
Insurance Specifications and the Bidding Process for Associations
Insurance Specifications and the Bidding Process for Associations
When insurance costs rise, a quick quote is not enough. Here's how community association boards should bid out their coverage and meet their fiduciary duty.
When insurance costs rise, a quick quote is not enough. Here's how community association boards should bid out their coverage and meet their fiduciary duty.
When insurance costs go up, the first reaction is usually "let's get another quote." It sounds simple. In practice, it puts a real burden on the board and the property manager, because the proposals that come back are almost never identical to each other or to your current program. When every proposal is built a little differently, the board is left with only one thing it can compare cleanly: price. And price is a function of coverage. More coverage usually means a higher premium. Not always, but most of the time.
The community association market offers limited insurance options to begin with. So with only a few real alternatives out there, how does a board, a manager, or a unit owner actually choose the right program?
The answer is to put together detailed insurance specifications and follow a disciplined bidding process. In a hard market or a soft one, that is the only way to make a true comparison, and it is how the board meets its fiduciary responsibility.
Start by Building Your Insurance Specifications
Once the board decides to bid out its insurance, the first step is to work with your current agent to develop the specifications. These "specs," as they are sometimes called, should capture every insurance requirement spelled out in the association documents, along with the coverage currently in place. Getting this right up front is what makes every proposal that follows comparable.
Choose Agents Who Know Association Insurance
With the specs in hand, the board can start selecting agents to present proposals. This is where expertise matters. Look for agents who genuinely know community association insurance, not generalists. You can find them through a recommendation from your property manager, by talking with other boards, or by contacting your local CAI (Community Associations Institute) chapter for members who are insurance professionals.
Keep the list short. Ask each agent for the companies they intend to supply proposals from. Two agents representing the same carrier are not equal. An agent's depth of expertise, relationship, and thoroughness with a given company is what produces the best program for the insured.
Assign carriers to each agent
Once you have each agent's list of companies, the board assigns specific companies to specific agents. This step matters because an insurance company will only give a premium indication to one agent per association. It is also common practice to let the incumbent agent keep access to their existing markets, unless they have given the board a reason to lose confidence in their work.
Send the Bid Package and Set the Ground Rules
Send the full bid package, specs included, to each agent, requesting proposals only from the companies assigned to them.
Each proposal should include a clear statement from the agent that it meets every requirement in the association documents and the insurance specifications. If a proposal deviates from either one in any way, that deviation needs to be spelled out plainly.
Require an in-person presentation
Each agent should present their bid in person, either at a board meeting or at a dedicated insurance presentation meeting. This gives board members the chance to ask questions and get answers on the spot, and it lets the board gauge how well each agent actually understands association insurance.
Make the Decision While It's Fresh
At the end of the presentations, the board should talk through the merits of each proposal and make a recommended selection. With every proposal still fresh in mind, the decision tends to come more easily.
Let Coverage Drive the Decision, Not Price
One rule holds the whole process together: price takes a back seat to coverage. Only after you understand the coverage, the agent's expertise, and the thoroughness of each proposal can you judge cost in a way that means anything. Compare price last, once you know exactly what each program actually delivers.
At Grimaldi Insurance, community association coverage is the core of what we do for boards across Western New York, and we are glad to help yours build specifications or run a bid the right way. Contact us to talk it through.
When insurance costs go up, the first reaction is usually "let's get another quote." It sounds simple. In practice, it puts a real burden on the board and the property manager, because the proposals that come back are almost never identical to each other or to your current program. When every proposal is built a little differently, the board is left with only one thing it can compare cleanly: price. And price is a function of coverage. More coverage usually means a higher premium. Not always, but most of the time.
The community association market offers limited insurance options to begin with. So with only a few real alternatives out there, how does a board, a manager, or a unit owner actually choose the right program?
The answer is to put together detailed insurance specifications and follow a disciplined bidding process. In a hard market or a soft one, that is the only way to make a true comparison, and it is how the board meets its fiduciary responsibility.
Start by Building Your Insurance Specifications
Once the board decides to bid out its insurance, the first step is to work with your current agent to develop the specifications. These "specs," as they are sometimes called, should capture every insurance requirement spelled out in the association documents, along with the coverage currently in place. Getting this right up front is what makes every proposal that follows comparable.
Choose Agents Who Know Association Insurance
With the specs in hand, the board can start selecting agents to present proposals. This is where expertise matters. Look for agents who genuinely know community association insurance, not generalists. You can find them through a recommendation from your property manager, by talking with other boards, or by contacting your local CAI (Community Associations Institute) chapter for members who are insurance professionals.
Keep the list short. Ask each agent for the companies they intend to supply proposals from. Two agents representing the same carrier are not equal. An agent's depth of expertise, relationship, and thoroughness with a given company is what produces the best program for the insured.
Assign carriers to each agent
Once you have each agent's list of companies, the board assigns specific companies to specific agents. This step matters because an insurance company will only give a premium indication to one agent per association. It is also common practice to let the incumbent agent keep access to their existing markets, unless they have given the board a reason to lose confidence in their work.
Send the Bid Package and Set the Ground Rules
Send the full bid package, specs included, to each agent, requesting proposals only from the companies assigned to them.
Each proposal should include a clear statement from the agent that it meets every requirement in the association documents and the insurance specifications. If a proposal deviates from either one in any way, that deviation needs to be spelled out plainly.
Require an in-person presentation
Each agent should present their bid in person, either at a board meeting or at a dedicated insurance presentation meeting. This gives board members the chance to ask questions and get answers on the spot, and it lets the board gauge how well each agent actually understands association insurance.
Make the Decision While It's Fresh
At the end of the presentations, the board should talk through the merits of each proposal and make a recommended selection. With every proposal still fresh in mind, the decision tends to come more easily.
Let Coverage Drive the Decision, Not Price
One rule holds the whole process together: price takes a back seat to coverage. Only after you understand the coverage, the agent's expertise, and the thoroughness of each proposal can you judge cost in a way that means anything. Compare price last, once you know exactly what each program actually delivers.
At Grimaldi Insurance, community association coverage is the core of what we do for boards across Western New York, and we are glad to help yours build specifications or run a bid the right way. Contact us to talk it through.
