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Published July 09, 2024

How HOAs and Property Management Companies Can Optimize the Insurance Bidding Process

looking up at palm trees by a high rise

In the current insurance market, many HOAs and management companies are anxious or even fearful about their upcoming insurance renewal – and that’s justified, considering the significant premium increases across the property insurance market over the past few years.

With a little preparation, however, it is possible to minimize pain at your next renewal, or even to reduce your premiums and improve your coverage terms. But to do that, you must understand the current insurance market and the system that agents and carriers must deal with to secure quotes.

Challenges in the Insurance Marketplace

Property insurance has seen the most dramatic increase in premiums and the imposition of restrictive coverage terms, not to mention the withdrawal of carriers from certain geographic areas, along with the unwillingness of some carriers to offer coverage to timeshare resorts.

Gathering Quotes for Your Vacation Property

In the past, it was assumed that involving two, three, or even four agents on your behalf to gather insurance quotes would secure the best results. That approach is actually the least effective way to manage your renewal in today’s market, and here’s why.

Resort properties in coastal areas, or areas susceptible to flood, earthquake, or wildfires, are considered undesirable by most carriers, who have limited capacity for risks of this type. Just a few years ago, a single carrier might have been willing to offer $20 million or more in property coverage limit, but today it requires the stacking, or towering, of multiple carriers to build that kind of limit. When multiple agents get involved, the limited number of carriers becomes so diluted that it’s difficult for any agent to build a complete and competitive program.

The most effective approach is to select one agent and give them full access to the market. That way, they’ll be able to arrange carriers in their most competitive position to build the best available program. Much like a jigsaw puzzle, the proper placement of carriers is critical to a comprehensive and competitive program.

Choosing the Right Agent

The agent can be selected through an RFP process, or through interviews or referrals. Just be sure that you are comfortable with the agent’s knowledge of timeshares, the lineup of carriers they can access and the scope of services they offer. Because of the unique insurance exposures involved with timeshare properties and the expertise required to build a property program in today’s market, the number of qualified agents is surprisingly small.

In the video below, see how Gregory & Appel’s long history of insuring resort & timeshare properties leads to knowledge other risk advisors may not share.

The Roles of Management Companies and HOAs

The direct involvement of the management company and/or HOA is critical to a successful renewal. They will need to provide a great deal of information to the agent. The more information the underwriter has about a risk, the more comfortable they are, and the more willing they will be to offer higher limits, improved terms, lower deductibles and competitive rates.

As an example, Gregory & Appel recently won a bid on a group of thirteen destination properties, most of which were in a hurricane-prone area. Prior to binding coverage, however, we performed an inspection of all the properties and uncovered several positive wind-mitigation features of the various buildings, along with formal policies and procedures that the insurance underwriters were not aware of.

The carriers viewed this information very favorably and reduced their overall property premium by 20%. The additional information increased their comfort level, and their willingness to offer more competitive pricing. Among the items of information an agent will need for the bidding process are the following:

  • Five years of loss information
  • Statement of property values (limits for buildings, contents and business interruption)
  • Construction details of the buildings (age, type of construction, square footage, updates on roof, wiring and plumbing)
  • Protective features of the building(s) (automatic sprinkler system, impact glass, etc.)
  • Copies of formal policies, procedures, disaster preparedness plans, etc.
  • A recent property appraisal, if available

In another example, we helped a timeshare client in Florida save money on their premiums by bringing in our own loss control experts during the renewal process. By telling a complete story of their exposure to risk – and the proactive ways they have worked to mitigate losses in the event of a catastrophic weather event – they were able to help secure big savings at renewal. Learn more in the video below.

Keep an Open-Minded Approach

In addition to the underwriting details the management company or HOA needs to provide, they will also need to have an open mind. Be prepared to consider alternate deductibles, policy limits and other creative approaches your agent might suggest to reduce premiums.

It’s also helpful to show a willingness to incorporate a carrier’s recommendations for physical changes to the property or amendments or additions to formal policies and procedures. The demonstration of cooperation can have a substantial impact on the carrier’s perception of your property, which can translate to better pricing and coverage.

Why You Should Expect Last-Minute Negotiations

One last word of caution: in today’s market, it is not unusual for you to be waiting until the last second to get your quotes. That’s because the remaining viable property carriers are swamped with submissions, and they don’t get serious about evaluating your property until the renewal date is near. That can be stressful and inconvenient for an HOA board to deal with.

At Gregory & Appel, our approach is to secure an indication from the carriers a month prior to the renewal date, which we communicate to our client as a worst-case scenario. We continue to negotiate with the carriers or involve new ones to improve terms all the way to the last minute, providing the client with weekly or even daily updates. Those last-minute negotiations almost always produce significant savings for our clients. Be sure that your agent takes advantage of the carrier’s willingness to negotiate at the last minute.

This is a difficult insurance market right now, so it is especially important that you use the bidding process to your advantage. Your preparation and involvement will help you secure the best possible outcome.


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Learn More About Risk Management for Destination Properties

Don’t miss the other entries in this series:

Why Are Insurance Premiums for Timeshares So High?

How Timeshare Associations Can Navigate Increasing Premiums

Is the Timeshare Insurance Market Softening?

Why Your HOA Board Needs Strategic Partnerships


This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

This content originally appeared in TimeSharing Today in May 2024.