Outrageous Board Decision Regarding Sevilla HOA Property Insurance

Why has the Sevilla Board of Directors placed homeowners in a precarious position if there is property damage within the common area or within your home?  

That occurred on October 15, 2024, when the board approved Sevilla Homeowners Insurance Policy went into effect, again without transparency or notice to all member homeowners.

The principal concern of members of the Sevilla Homeowners Association is the board’s decision to raise the property damage deductible from $10,000 to $50,000. Why in the world would the board of directors agree to a 400 % increase? To save a few thousand dollars on insurance policy premiums or to shift responsibility to individual homeowner members when there is a claim for property damage especially when it is within a member’s home!

Who was behind this? Although all members and board directors are concerned about insurance premium costs, the board, especially one board director pushed to keep the insurance premiums low. This board director urged other directors to lower the property damage premium by raising the deductible 400%.

Who really pays for this 400% property damage deductible?  Of course, all individual homeowners if there is damage to their individual property and collectively if there is property damage to the common area or an individual member’s property.

Let’s sort this out –

Prendeville Insurance Agency in its recent notice to members on March 26, 2025, provides an example that clearly provides a contradiction. The example provided suggests that if “a water pipe bursts inside a unit, which causes damage . . . the individual homeowner may be solely responsible for the Association’s insurance deductible.”  That is outrageous. Many members of the Sevilla HOA have had pipe breaks within their homes causing water damage over the last ten years, but only two members have been able to successfully place claims with the Association’s Insurer.

In fact, no other claims could be made due to the denial of further claims by the insurers and the blockage of attempted claims by the Board and a property management company. Several members have had slab leaks causing damage to their garages, kitchens, and other interior areas, but they were told not to file insurance claims because the insurers would reject the valid claims and most likely not reinsure Sevilla the following year. Is that fair?

What would it cost to repair a slab leak in your garage and re-route pipes along the back wall of your garage and ceiling over to the hot water heater? Suppose it was six- thousand dollars. Who should pay? According to the CC&Rs and the Insurance Policy, the Association is responsible for the repair. However, the insurance deductible is now $50,000 for a $6000 repair. The HOA won’t pay that amount and will inform the homeowner that they alone will have to pay for the repair. The HOA doesn’t want to file a claim and doesn’t want to pay for the repair.

Here’s another situation. There is a water leak in an upstairs bathroom, a pipe breaks, and water is flooding your bathroom causing water damage to the bedroom next door and the living area down below. The cost of repairs is about $35,000. Remember the CC&Rs and the insurance policy indicate that the Association is responsible for the repairs. Certainly, the Association would want the homeowner to pay for the repairs and/or deductible and would not want to file a claim.

Is this fair? Heck no. Keeping premiums low and maintaining insurance is understandable, but at what cost to the homeowner?

Prendiville Insurance Agency is encouraging homeowners to get additional HO-6 insurance to insure for all improvements and upgrades since the Association’s policy only covers the original builder’s grade components such as cabinets, flooring, plumbing, and electrical fixtures, etc., in addition, to a recommendation to purchase additional insurance which helps the homeowner pay for the Association’s deductible – See where this is headed.

Remember, Board Directors and Property Managers must avoid personal liability by not making insurance coverage determinations. If Board Directors prevent a claim from moving forward, these directors could be in breach of their fiduciary duty.

FYI: Sevilla HOA has no Earthquake Insurance Policy

What can you do as a member of the Association?

▪Demand Transparency

▪Attend Board Meetings and Ask Questions

▪Write to the Association for Clarification and Demand Responses

▪Request Records that Members are Entitled To

▪Participate in a Town Meeting to Support Homeowners Who Have Similar Concerns