July 28, 2025 • 32 mins
Board member incivility is rising, and it's costing your HOA! Learn how to reduce insurance claims & protect your community!
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You might have noticed, but lately Incivility is rising in community associations. This, in turn, is leading to more liability claims with higher premiums and denied insurance coverage. Robert Nordlund and Kevin Davis join us this week to break down how board member behavior impacts the financial stability of HOAs. From increased anxiety after COVID to growing legal settlements, they explain how simple steps like rule enforcement, communication, and confidence can make a real difference.
Chapters from Today's Episode:
00:00 What role do insurance companies play in HOA board performance?
01:08 Why are insurance companies pushing board members to do their jobs?
02:55 How has incivility among HOAs increased since the pandemic?
05:36 What are the consequences of board members acting from fear?
08:50 How does rule enforcement impact insurance and community stability?
12:10 What is social inflation and how does it affect liability claims?
16:42 Ad Break - Kevin Davis Insurance Services
17:16 What are some real-world examples of expensive HOA claims?
18:30 How can board members avoid high deductibles and rejected claims?
21:44 How does better communication lower the risk of insurance claims?
25:00 Why should HOA boards treat their roles like a business?
28:16 What strategies can help reduce future insurance costs?
The views & opinions expressed in this program are those of the Hosts & Guests, intended to provide general education about the community association industry. The content is not intended to provide specific advice or recommendations for any individual or organization. Please seek advice from licensed professionals.
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Julie Adamen
Kevin Davis, CIRMS
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kevin Davis (00:00):
So there are ways that we can do from the
(00:01):
insurance company to say, Guesswhat, your participation in this
will help you do your job alittle bit better. And that is
the direction that insurancecompanies are going right now,
do your job a little bit better.
Because guess what, that claimcomes in, he may not be covered.
You may not be covered.
Deductible be high enough whereyou have to participate in it to
(00:21):
do your job just a little bitbetter.
Announcer (00:24):
HOA Insights is brought to you by five companies
that c (00:26):
Association Insights and Marketplace, Association
Reserves, Community Financials,HOA Invest and Kevin Davis
Insurance Services. You'll findlinks to their websites and
social media in the show notes.
Robert Nordlund (00:40):
Hi. I'm Robert Nordlund of association
reserves,
Kevin Davis (00:42):
and I'm Kevin Davis of Kevin Davis Insurance
Services. And this is HOAInsights, where we promote
common sense for...
Robert Nordlund (00:49):
...common areas. Well, welcome to episode
116 where we're again speakingwith insurance expert and
regular co host Kevin Davis, sohe can connect some dots for
you. We've had some recentepisodes talking about the rise
in incivility from a boardmember and manager point of
view, and recently from anattorney. And that was Ed
Hoffman in episode number 104 socontinuing our goal to share
(01:11):
some of the best informationavailable with our audience our
own Kevin Davis here feels hehas enough DNO liability
insurance claims information tolink the rise in incivility to
the actual cost of thatbehavior. This helps you our
podcast audience, to be wellinformed and to be well prepared
for the challenging work you doleading your association. Well,
(01:34):
last week's episode number 115featured a great interview with
Mitch Gassen of HOA assist,that's a company specializing in
supporting the accounting andadministrative needs of
associations who wish somesupport, but not full
professional management. Now,for many associations, this is a
lower price point sweet spot,and it's great to be able to
(01:56):
share information aboutcompanies like HOA assist who
have risen to support boardmembers, and I'll say it again
in the hard work they do leadingtheir association forward. So if
you missed that episode or anyother prior episode, take a
moment after today's program tolisten from our podcast website,
Hoa insights.org, or watch onour YouTube channel, and, better
(02:17):
yet, subscribe from any of themajor podcast platforms so you
don't miss any future episodes.
Well, those of you watching onYouTube can see the HOA insights
mug I have here, volunteer boardmember logo that I got from our
merch store, which you canbrowse through from our Hoa
insights.org website or the linkin our show notes, and you'll
(02:40):
find we have some great freestuff there, like board member
zoom backgrounds and somespecialty items for sale, like
this mug that I just showed sogo to the merch store, download
a free zoom background, thentake a moment look around and
find the mug you'd like. And ifyou're the 10th person to email
me at podcast at reserves, a.comI'll ship that mug to you free
(03:00):
of charge. Well, we enjoyhearing from you responding to
the issues you have at yourassociation. So if you have a
hot topic, a crazy story, or aquestion that you'd like us to
address, you can always contactus at 805-203-3130, or email us
at podcast at reserve city.combut today's episode comes from
(03:23):
Kevin, who reached out to mekind of excited. I can tell when
he's got that kind of skip inhis voice, excited to share
about what he's learned aboutthe actual cost of incivility.
So Kevin, you certainly piquedmy interest. Tell us what you've
learned.
Kevin Davis (03:40):
Okay, well, this is fascinating because I was
listening to the Civility by Ed,right, and he hit some key
points in there. He talked aboutthat he had three law Yeah,
three board members recalled inone year, he talked about the
trash cans, all the things I'vebeen talking about to you. And
so the lawyer says I'm seeingthese problems a day. So once he
(04:03):
said he sees them, then guesswhat? It's gotten bigger. Yeah,
you know, as aid insurancespecialist who handles, do you
know all I see? Just like apoliceman who sees traffic all
the time, he's that's all hesees. So to him, everybody is
decided to see Right, right?
That's your world. That's myworld. So somebody else's father
saw my world, and he was like hewas overwhelmed by what he's
been seeing. And he's been evenseeing it now for five years,
(04:25):
okay? And this is the point ithas been going on since COVID.
And what COVID has done, it gaveus a sense that we are not in
control, okay? And since COVID,over the past five years, we've
all had this feeling of not incontrol of our lives, you know,
which creates anxiety and allthese different things inside of
(04:47):
us. Now, when you have anxiety,when you are suffering, the key
to the whole thing is takeaction. So when you want to do
something, yes, you got to dosomething like every morning.
Saying, you know, I sleep and Iworry and I get up in the
morning, I take a walk. I takean hour walk, come back, feel
refreshed. I'm ready to go. So,as humans, you know, whenever,
whenever we feel lost and out ofcontrol, we have to take action
(05:09):
in the community. Associateworld, action means I gotta jump
in there and do something. Youknow, the problem, stir up the
pie. And that's what created theproblem in the past five years.
That's what he missed. Numberone thing that he missed was the
fact that everybody who lives inCommunity Association, not
everybody, but people who livein community association, has
that feeling of, you know, outof control because of society
(05:32):
and COVID, everything like that.
And so what they're doing now issaying to the boards, guess
what? What do you mean, youknow, I can't have a pet. Or
what do you mean, I can't dothis. And who do you think you
are? And tell me about thedocuments. And so now they went
from that that level, and nowall of a sudden, boom, they
(05:54):
created this, this, this massiveinternal struggle, that that's
where it all come from.
Robert Nordlund (06:00):
Okay, well, I'm just thinking about community
associations in general, andit's built on the understanding
and expectation that there'sgoing to be volunteer board
members who put in the work, putin the hours, to lead the
association, and almost bydefinition, except in very tiny
associations, the people beingled, there's going to be more of
(06:21):
them than the people leading ina 50 unit Association, 100 unit
Association, you got, what, 45people, or 95 people that are
following, and they're the onesthat are anxious. So if you're a
board member and you're feelingthe heavy burden, then, yeah, go
out, take a walk, but or Callyour attorney, or call your
manager, call your other boardmembers, figure things out. What
(06:43):
do we need to do to help ourassociation? But I can see that
the majority of owners arewondering, okay, what can I do?
Yeah, does it really say that inthe governing documents Exactly?
And they turn to Attorney Googleand things like that, and
(07:04):
they're wondering, and
Kevin Davis (07:06):
that's how remember we talk. We say that the board
has a responsibility to enforcethe rules, maintain the
association and collectassessments, and that's what
they've done forever. But nowwhat happens is, because of
that, that heightenedexpectation, they called I need
to take action as a unit owner.
Guess what? I don't believe youhave the authority that passed
that special assessment, becausespecial subject is what special
(07:27):
and he does it six months ago.
Who do you think you are, youknow? And guess what, those
trash cans. And he mentioned Ed,mentioned the trash cans. And
the one thing is, yeah, peoplesees trash cans for more than 48
hours, and they got to be inthere. It takes, they have to
take action. And that's theproblem. It take. You got to
take action, and you feel likeyou have some sense of control.
(07:49):
Yeah.
Robert Nordlund (07:50):
I'm thinking back. Do you remember an episode
we do? It did with George Nowaklong ago, yeah. And the thing
that surprised me in that he wastalking about how it's
impossible to be perfect as aboard member, and I, I was
wondering about that. I wantboard members to strive to get
it all right, but just thenature of being human is you're
(08:13):
going to get something wrong.
You're going to get anotification late for the next
board meeting. You're going tothe trash company is going to
move collections from 2p or twoo'clock or Tuesday to Wednesday,
and all of a sudden it'supsetting the entire apple cart.
And you had nothing to do withthat as a board member. It's
outside circumstances. And sopeople are, as you say, uneasy,
or more uneasy than they were afew years ago, and we're
(08:37):
struggling to hold on to, okay,what, what can I hold on to? And
what did we learn when we werekids? The only thing that's
constant is change, andsometimes that is somewhere
between medium and veryunsettling.
Kevin Davis (08:53):
I mean, just think about before COVID, right? We
come home, we get up in themorning and go to work, come
home, four or five o'clock, wehave dinner, watch a little TV.
But now, at two o'clock in theafternoon, we're sitting at our
desk. We're watching we'rehearing pickleball outside. You
know, we somebody smoking upunder my window. They should be
smoking. You know, the dog isbarking because they have a
(09:14):
COVID pet that they at work.
These are the things now thatwe're looking at in community
associations that we haven'texperienced before. As a result,
we're heightened, and then we'reanxious, and anxious means we
got to take action.
Robert Nordlund (09:27):
Okay, with all this. Now you're in the DNO
industry. My kind ofunderstanding has been that,
don't most associations have DNOinsurance? Or is it all? All
associations
Kevin Davis (09:38):
right now and today, they all have it now
this, let's talk a little bitabout what DNO and we talk about
it's directors, and alsoliability and insurance. You
have a liability policy if youget into an accident in your
car, so you got Bolly injury, ifyou hurt somebody, and probably
damage if you if you have damageto your car, got it. Well, what
you have in the communityassociation is DNO protects you.
(10:00):
Against decisions that you'vemade or decisions you didn't
make. So that's what you'retalking about. So is that you as
a board member, you have to makedecisions. Okay, that's your
that's your entire job. That'syour entire job, and it's
usually about the three things Imentioned, you know, enforcing
their documents, you know,maintaining and collecting
dollars, three main jobs. Okay,now, if you don't do it, or the
(10:23):
perception, if you don't do it,guess what happens? Or you get
this perception, you've done itwrong. It did it wrong, yeah.
Now, historically, that's beenwhat it was. And it used to be
something really serious, like,all of a sudden, you know, wait
a minute, I looked at thebudget, and the budget is not
done well. And, you know, theCPA miss some numbers, I mean,
(10:44):
or there's a theft there, or,guess what? The rules you have
are outdated, you know, we needto update the rules,
Robert Nordlund (10:50):
you know. Or you didn't count the ballots in
front of witnesses or something.
Yeah, yeah.
Kevin Davis (10:55):
But today's all perception, you know, I perceive
that you haven't done. Iperceive that. You know my dog I
have. You know, even though youdon't have, you're not allowed
pets in your community. I have aletter from from my doctor says
I need to have a pet. And thenthe board members, what they'll
do is they start heighteningthemselves up to it, so you see
(11:17):
lack of civility on their sidetoo, by saying, I don't care. We
get rid of it anyway. And that'stheir problem on their side,
Robert Nordlund (11:24):
yeah. And you've talked about that
elevating the temperature, whereelevating temperature, you start
getting into conflict. And thenall of a sudden, the community
aspect of us being at Happyvillas, all of a sudden, it
turns into argument. Villas,intense villas. And
Kevin Davis (11:38):
it goes back to Ed.
It was so important what hebecause he his tone was more
like he was surprised by allthis. He said, after all these
years I've been in it, I'd neverseen anything like this before.
And for me, I would see it. Youknow what? I it's every day to
me, first time you've seen it soand it goes back to the simple
thing is that as board members,you know, we have to make
decisions which is in the bestinterest of the community
(12:00):
association. We have to act. Wehave that fiduciary
responsibility. Okay? Theproblem is, is that if we get
inundated by people who says,This is unfair, you're treating
me unfair. The rules are unfair,discriminatory. You know, you're
harassing me. You're bullyingme, all the stuff that wear and
tear on that board member'sshoulders, it becomes
overwhelmed. So now they becomeindecisive, they have doubt. And
(12:21):
so now all of a sudden, theyneed to pass a special
assessment, because we place thebalconies, and guess what
happens? They get afraid, theyget anxious, and so they don't
do anything. And all of asudden, by doing nothing, it
compounds the issue.
Robert Nordlund (12:36):
You know, we've talked about the four C's, the
aspects of a board member, and Ithink we need to add confidence
in there, because when you'releading with confidence, then
people say, Oh, they must knowwhat they're doing. We teach our
new site inspectors, we're inthe reserve study business. We
teach our new site inspectors,wear your local wear, have your
(12:57):
equipment on you. Be very clear,be very professional, and look
like you know what you're doing.
Look like you belong there. Andsomeone might wonder, what's
that young man doing, takingpictures and measuring. And if
they look closely, they'll seethat they're they have logo wear
on and they Oh, well, they looklike they're appraising
something or doing something.
(13:19):
And they keep on walking theirdog, and they don't wonder,
because we walk with confidence.
And that idea of a board memberhaving the confidence I'm doing
the best I can, we got three outof five people on the board that
have decided this is thedirection we're going to go look
around. We may not haveconsensus, but we have clarity
(13:39):
that this is how we're going tomove forward. Here we go. And
Kevin Davis (13:45):
you have it goes back. It goes back to treating
them as a treating as abusiness, not a hobby, not
something we do because nobodyelse is doing it. Once we run
that board of directors, we'relooking at and go, Okay, how are
we going to bring the value ofour community association up. We
want to increase our value. Howdo we do that? How we get this
down? Okay? And if you go intothat direction now, you have the
(14:08):
confidence, because you have amessage, you have a reason for
existing, as opposed to whatnobody else is here but me, and
I'm the last one, and I'm nothere. Well,
Robert Nordlund (14:17):
Kevin, one thing I caught there was that
you use the word confidence, andwe've talked about caring, we've
talked about curiosity, wetalked about communication, we
talked about courage, and thisword confidence really struck a
nerve with me that you may notknow exactly what's right, you
may not have unanimous board,you may be uncertain, but you're
(14:40):
together as a board, You'removing forward, and you need to
act with confidence. How muchdoes confidence mean to the the
population at your communitywhen you're trying to move
forward successfully?
Kevin Davis (14:53):
And that's the key, and the way to me, you get
confidence. If you have amission, your mission is to
increase the value Associationyou. That's all we have. One
mission is to say, right now,the value my community
association should be up 10 20%higher than the one across the
street. So we're going to makesure our association is
maintained properly. We makesure we're enforcing the rules
correctly, and we make surewe're budging the right way. If
(15:15):
you do those, you have a COVIDassociation. You have people who
really walk around thatassociation and feel that they
they are in charge, and theyhave control. And that's the key
thing this whole conversation,Robert, is that if you have a
sense of control, you don't needto take any action. You can walk
through there and they can theycan complain and say, Guess what
(15:36):
those rules that you've been intrying to enforce in terms of
the pool hours or the gym hours.
I don't think they're fair, yes,but guess what? They're
consistent. They're uniform. Wewant consistency. Consistency in
our association. There's nothingmore important than that. Well,
I don't believe it is. So guesswhat? You know? I tell you what,
send us a letter, come to ourboard meeting. We're glad to
hear from you. Yeah, you're
Robert Nordlund (15:56):
treating everyone fairly. Okay, when you
say confidence, that's notwalking around like a bully, but
confidence in that we aretreating people equally. We're
trying to run this associationwell, and by golly, things are
going smooth here at ourassociation, and that confidence
leads to, I would say,community, right? Exactly,
exactly. Well. Hey, You temptedme at the very beginning with
(16:20):
talking about the cost, you'vebeen able to link the cost. Do
we have time to start that one?
Or do you want to take a quickbreak? At this time, it's time
for a break, and we'll come backand talk about the cost. Okay,
fantastic. Well, this time, it'stime to hear from one of our
generous sponsors after work,which we'll be right back with
more common sense for commonareas, and we'll talk about the
cost of incivility.
Kevin Davis (16:42):
Hi. I'm Kevin Davis, the president of Kevin
Davis Insurance Services. Ourexperienced team of underwriters
will help you when you get thatdeclination. We provide the
voice of reason, someone whowill stand by you. Our
underwriters bring years ofknowledge to our clients that
can't be automated by technologyor driven by price. As a proud
and wins company. We bring truevalue to your community
(17:05):
association clients. We are yourcommunity association insurance
experts,
Robert Nordlund (17:10):
and we're back.
Well, Kevin, tell us about DNOclaims and costs.
Kevin Davis (17:16):
We talk about costs and we talk about insurance
dollars. This is real dollars.
Amount. What we're talkingabout, there's two types of
losses, severity losses. Thatmeans you're spending millions
and millions of dollars. Okay?
Then we talk about small losses.
Let's talk about the big onefirst. And I love to always
start with something simple,Robert, you remember the lady
that McDonald's for the hotcoffee yard? Right? Oh, right.
(17:36):
Long time ago, long time ago,the amount of damages was $3
million okay? And $3 millionchanged the world. Everybody
thought the most outrageousname, how dare you the lady got
second. Oh, I can't believe howhorrible this. Well, a couple of
years ago, Starbucks had thesame thing happen for $40
million
Robert Nordlund (17:56):
All right, so talking about awards getting
big, yes,
Kevin Davis (17:59):
and what we call an insurance world is social
inflation. You know howinflation that's coming into our
world right now, because you'repaying more well in insurance
world, liability claims haveincreased. So went from $3
million to $40 million so itwent up 10 times. And that's the
problem with insurance today isthat when there is a liability
(18:23):
claim, when somebody is beingwhen you're suing you, you're an
auto accident. Right now, eitherwe relate to Bodi injury or
property damage, those twothings, and people, when that
happens, you see thosecommercials, win big. You win
big. You win big,
Robert Nordlund (18:36):
big. Call this number, and that's it. We'll
fight for you. We'll
Kevin Davis (18:40):
fight for you. And you know how many lawyers we've
received since COVID? Lot of youwent back to the law school and
said, I'm gonna become a lawyerand make a lot of money. Okay,
they are so many lawyers outthere, and they're the ones who
say in the commercial, had thishappened to you? You've been
treated unfairly. Have you beenharassed, discriminated? Have
you been bullied? You know, ifyou have call this number, and
(19:02):
we will see you get paid. Andwhat happens is now that $3
million announce worth $40million 100,000 is now worth,
you know, 3 million, and that'swhat insurance problem comes
into play. We have to decide howmuch to charge you now, you
know, because you know, you havethese jurors in there who loves
giving awards out to people whothink they've been harmed and
(19:25):
now not damaged so much, butharm. They've been harmed,
emotionally harmed, physicallyharmed also. But the days are
gone when we thought that youhad a million dollars. Was a lot
of liability. It's not anymore.
Robert Nordlund (19:39):
Well, I want to catch something that you said.
There the emotional damage. Now,if you get coffee spilled on
you, and you have burns, thenyou have medical bills, and
maybe you miss some work, and soyou have some loss of income. So
there are some economic there'ssome real dollar losses there.
But when we're talking abouthere and tension and a dog. Dog
(20:00):
and harassment. How do you put anumber on that? Or do you even
put a number on that
Kevin Davis (20:05):
that the judge, yeah, we in a courtroom, the
jury puts a number on that. Howmuch? How much has this person
been harmed in the community?
Okay, I know that a person can'twalk his dog out there anymore
because you label the dog assomething that's unfit,
shouldn't be there, even though,exactly ferocious, exactly, you
know, but I have a doctor's notesays my dog should be there. So
guess what? I'm going to file aclaim against you because you
(20:28):
harmed me. Okay, yeah, and thosewhen you say harm now, all of a
sudden, you have, you know,lawyers on now the phone saying,
well, guess what, we want to goright to the insurance carrier
and say, All right, let's sweat.
I see you have a $5 millionpolicy or $1 million policy. We
want $5 million right now. Nowinsurance company gonna say, no,
(20:48):
no, you're not gonna get $5million you gotta be kidding.
And then all of a sudden theymay get $2 million or $3 million
you know, historicalnegotiation. It could be it
could be negotiation, buthistorically it was 300 $400,000
now they talk in terms ofmillions, and the problem is, is
that Cuban Association don'thave those kind of limits
available. They don't have 1020,$30 million of coverage out
(21:13):
there. They have a $5 millionlimit on their policy. So what
happens is that again, and justthink about what happens if you
don't repair your roof, and roofleaks and destroyed. Some
paintings on the wall. Now, allof a sudden, those paintings on
the wall you may have boughtfor, you know, a couple $1,000
they're worth, what $100,000
Robert Nordlund (21:31):
I mean, you know, the values
Kevin Davis (21:35):
and everything has increased. You know, my car all
of a sudden, you know, there'swater dripping in their garage.
My car is worth a lot moremoney, and I can't use my car,
and it's pain and suffering.
Yeah, and you live in acommunity association, you see
the news all the time. You seepeople getting these huge
judgments and huge awards. Sothey pick up one of those
lawyers that you see 1/8 andgeneral call lawyer, and you got
(21:57):
them on the phone, and whathappens is the insurance costs
go up so that this theliability, not just the
judgment, but now the costs goup in terms of either hire my
lawyer I may have to hire in thecommunity association may hire
two or three lawyers. Forexample, you know, Ed said that
they had three elections in oneyear. Okay, well, someone has to
(22:18):
determine which one thoseelections are the legitimate,
which one those boards arelegitimate. And guess what
happens? They start suing eachother, and the judge have to
determine the cost in it. Howmuch should that cost the
insurance company? Because nowof a sudden, if these are
directors and officers, theseare directors and officers, and
these are directors andofficers, you have to defend
them all until the judge says,Guess what, you're the real one,
(22:38):
and then at that time it stops.
Robert Nordlund (22:43):
You got me rubbing my forehead? Yes, okay,
I don't want you giving too manyideas to disgruntled homeowners
who are listening. We want tohelp board members here so
there's higher awards. Yes,there's mistakes that can be
made. Yes, we want to encourageconfidence. We want to encourage
(23:03):
community. We want we've said itso many times. We want to
encourage lowering thetemperature and saying and
transparency. We've got nothingto hide those kinds of things.
But still, I want to get back todo you have a number in your
brain for how much thisincivility has cost us. That has
(23:24):
insurance premiums, DNO,insurance premiums gone up by X
percent,
Kevin Davis (23:31):
okay? There's two parts to the economic that the
dollars amount, large losses,okay, and then the small losses.
The small losses are the oneabout the trash, the trash cans
being out, or the pets that cost30, $40,000 maybe $50,000 Okay,
so now you have an insurancepolicy that you're getting for
$2,000 and we're starting to seea rash frequency. We call it
(23:55):
frequency claims, where theboard is being sued, because
people feel they've beenmistreated. So all of a sudden,
right now, we're doing okay, anda lot of our competitors are
doing the same thing and saying,Where are these claims coming
from? What party United Statesare seeing more of these type of
claims anywhere else, and thoseparts of the of the country that
(24:17):
are seeing more claims, we haveto make decisions in terms of,
what do we do about it? And ourdecisions always based on three
things, a raise rates. Two, puta deductible on there or put
exclusions in there. And so theinsurance companies right now we
do is say, Okay, from anexclusion point of view, we know
every Association has that oneguy in there that caused a lot
(24:39):
of trouble, we will exclude himfrom coverage. So every time
that person sues the board, theboard has no coverage, so the
board has to take responsibilityfor that person's actions.
Robert Nordlund (24:51):
That puts pressure on the board to use kid
gloves when they're dealing withJoe in unit number 13, a joint
and. But Jonah union number 13and they all in the back of
their minds, put a clock ontheir brain that they hope Joe
moves out. But in the meantime,Joe and unit number 13, they
need to be polite. Maybe that.
Maybe that's it. It forces theboard to be polite, to answer
(25:12):
their emails in a timely manner,to be patient to smile at them
when they're walking around. AndI almost want to say, do what
they should always be doing.
Kevin Davis (25:30):
That's the whole point. That's why I got excited
about today's topic, becausethere is a cost. There's $1 cost
to the insurance. But insuranceis saying, guess what, we want
you to participate in that lossfrom now on, you know, if
there's a loss against somebodywho we're not insuring, you have
to cover that. So you will, youwill do a better job in that one
person, or we will put a higherdeductible there. So if there's
(25:52):
a loss a DNO claim, we may put a$10,000 deductible on there and
say, Guess what? You pay thefirst $10,000 and then we will
pay everything other than that,because right now I'm concerned
about the frequency of claims,the frequency of harassment,
discrimination and bullyingclaims we are seeing because
people feel they're not beingheard, they're not being treated
(26:15):
fairly. So there are ways thatwe can do from the insurance
company to say, Guess what, yourparticipation in this will help
you do your job a little bitbetter. And that is the
direction that insurancecompanies are going right now,
do your job a little bit better.
Because guess what? That claimcomes in, he may not be covered.
You may not be covered. Youknow, deductible be high enough
(26:35):
where you have to participate inthere to do your job just a
little bit better.
Robert Nordlund (26:42):
Got it. There's another voice in the back of my
head so many times when I'vespoken to you in the past, it's
this voice that says insuranceis for accidents, not for known
things. And you've preached tome that you've got to maintain
your property because you don'twant to invite a roof leak, you
don't want to invite a slip andpull slip and fall hazard. You
don't want to invite a gatebeing open. So it's the pool
(27:04):
presents itself as a hazard. Andso if you know Joe in unit
number 13, is a known hazard, doyou need to step up? Because
that's no longer an accident.
Joe is just the kind of guywho's no offense to Joe in unit
13. You're out there. Thatperson just is has a hard time
with living in community, and sothe board's got to step up,
(27:25):
because, again, Joe's not anaccident. He's a known issue,
and that's what
Kevin Davis (27:32):
insurance companies are doing across the board. Now
for community associations, mostof the associations out there
have water damage claims, thenumber one type of claims, and
community associations, waterdamage, pipes break over,
toilets overflow, right? Sowe're saying is that, guess
what? If you have a claim ofthat nature, you have a $25,000
deductible, then all of asudden, whoa, wait a minute.
That's way too much. That'sokay. So now the boards are
(27:55):
participating and saying, theseare things we're doing to make
sure we don't have water mix
Robert Nordlund (28:00):
maybe. So we're talking about being proactive
and maybe sending a maintenanceperson or a plumber to inspect
the water heaters, or would anassociation hand out a higher
level or new washing machinehoses? Exactly,
Kevin Davis (28:17):
okay, yes, there are things that there's a lot of
things they can do right now tolimit their losses. Okay, an
insurance company is saying,guess what? We're not only
raising rates, but we're goingto hold you accountable. Make
sure you do your job, becausethe insurance policy not a
maintenance contract. We're notthere in roof leak or you have
these issues, we want you tomaintain it, and we're there if
(28:38):
there's an accident, somethingcalled Southern accidental, you
know, a sudden accident. Hey,we're there, but it was wear and
tear. We're not there. On theDNO side, it's the same thing.
It's becoming the same thing,because we know, if you treat
people fairly, if you have open,honest communication, and guess
what, somebody sues you becausethey believe you would act it
(28:59):
improperly. You didn't followthe rules where you should, but
you believe you did. Thosepeople we want to defend. We
want to defend the boards outthere that are doing the job
they should be doing, and theones that are not doing the jobs
we're saying. Guess what? We'lltake a pass on that board,
because that one person thatassociation is going to
continually give us problems dayin and day out. You know, I
Robert Nordlund (29:22):
had a couple of questions here as I was
preparing for this interview.
What can boards do to actuallylower the temperature? And you
just went through it, treat themfairly open and honest
communication, and then do yourbest to and you've given me
those three things always, toenforce the rules, maintain the
association, collectassessments. If you're doing the
right kind of things, you'restacking the odds in your favor.
(29:43):
Okay? And then
Kevin Davis (29:46):
when there's a claim, comes in, and guess what,
you get defended. You paydefense calls. Life goes on is
over.
Robert Nordlund (29:52):
You make it sound so simple.
Kevin Davis (29:54):
That's why I called you when I heard civility is now
is a point in time where peopleare. Recognizing that there's a
problem in communityassociations. We've been seeing
it for five years now. The daythe lawyers are seeing it,
they're saying boards, you haveto do something about it,
because it's becoming a aserious problem.
Robert Nordlund (30:12):
Got it okay? So you have some claims that you
call the severe ones, andthey're getting bigger because
of social inflation. You havesome claims that are the small
ones, and they're notnecessarily getting bigger, but
they're getting more frequent.
So you need to do what you cando to minimize those Okay, I
like putting it back into theboard members hands and having
them leave this podcast episodesaying, Okay, there's something
(30:33):
I can do to keep that insurancecost, to keep a lid on it. We
can treat people fairly open andhonest communication. And if
they're not taking notes, I'llput it in the show notes,
enforce the rules, maintain theassociations, collect
assessments. You got it? Kevin,thank you. As always, it's great
talking with you. Any closingthoughts to add at this time to
(30:57):
put a bow on this conversation?
And
Kevin Davis (31:00):
I think, I think you nailed it, open, honest
communication, I guess, gets youa long way at this being
confident. Confidence, you knowyou're doing your job for one
reason. You want to improve thevalue Association.
Robert Nordlund (31:12):
I like that confidence is one of those magic
words. Well, we hope you learnedsome HOA insights from our
discussion today that helps youbring common sense to your
common areas. Thank you forjoining us. We look forward to
bringing many more episodes toyou, week after week after week,
we'll be here. It'll be great tohave you join us on a regular
basis. Spread the word.
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(32:18):
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So there are ways that we can do from the
(00:01):
insurance company to say, Guesswhat, your participation in this
will help you do your job alittle bit better. And that is
the direction that insurancecompanies are going right now,
do your job a little bit better.
Because guess what, that claimcomes in, he may not be covered.
You may not be covered.
Deductible be high enough whereyou have to participate in it to
(00:21):
do your job just a little bitbetter.
Announcer (00:24):
HOA Insights is brought to you by five companies
that c (00:26):
Association Insights and Marketplace, Association
Reserves, Community Financials,HOA Invest and Kevin Davis
Insurance Services. You'll findlinks to their websites and
social media in the show notes.
Robert Nordlund (00:40):
Hi. I'm Robert Nordlund of association
reserves,
Kevin Davis (00:42):
and I'm Kevin Davis of Kevin Davis Insurance
Services. And this is HOAInsights, where we promote
common sense for...
Robert Nordlund (00:49):
...common areas. Well, welcome to episode
116 where we're again speakingwith insurance expert and
regular co host Kevin Davis, sohe can connect some dots for
you. We've had some recentepisodes talking about the rise
in incivility from a boardmember and manager point of
view, and recently from anattorney. And that was Ed
Hoffman in episode number 104 socontinuing our goal to share
(01:11):
some of the best informationavailable with our audience our
own Kevin Davis here feels hehas enough DNO liability
insurance claims information tolink the rise in incivility to
the actual cost of thatbehavior. This helps you our
podcast audience, to be wellinformed and to be well prepared
for the challenging work you doleading your association. Well,
(01:34):
last week's episode number 115featured a great interview with
Mitch Gassen of HOA assist,that's a company specializing in
supporting the accounting andadministrative needs of
associations who wish somesupport, but not full
professional management. Now,for many associations, this is a
lower price point sweet spot,and it's great to be able to
(01:56):
share information aboutcompanies like HOA assist who
have risen to support boardmembers, and I'll say it again
in the hard work they do leadingtheir association forward. So if
you missed that episode or anyother prior episode, take a
moment after today's program tolisten from our podcast website,
Hoa insights.org, or watch onour YouTube channel, and, better
(02:17):
yet, subscribe from any of themajor podcast platforms so you
don't miss any future episodes.
Well, those of you watching onYouTube can see the HOA insights
mug I have here, volunteer boardmember logo that I got from our
merch store, which you canbrowse through from our Hoa
insights.org website or the linkin our show notes, and you'll
(02:40):
find we have some great freestuff there, like board member
zoom backgrounds and somespecialty items for sale, like
this mug that I just showed sogo to the merch store, download
a free zoom background, thentake a moment look around and
find the mug you'd like. And ifyou're the 10th person to email
me at podcast at reserves, a.comI'll ship that mug to you free
(03:00):
of charge. Well, we enjoyhearing from you responding to
the issues you have at yourassociation. So if you have a
hot topic, a crazy story, or aquestion that you'd like us to
address, you can always contactus at 805-203-3130, or email us
at podcast at reserve city.combut today's episode comes from
(03:23):
Kevin, who reached out to mekind of excited. I can tell when
he's got that kind of skip inhis voice, excited to share
about what he's learned aboutthe actual cost of incivility.
So Kevin, you certainly piquedmy interest. Tell us what you've
learned.
Kevin Davis (03:40):
Okay, well, this is fascinating because I was
listening to the Civility by Ed,right, and he hit some key
points in there. He talked aboutthat he had three law Yeah,
three board members recalled inone year, he talked about the
trash cans, all the things I'vebeen talking about to you. And
so the lawyer says I'm seeingthese problems a day. So once he
(04:03):
said he sees them, then guesswhat? It's gotten bigger. Yeah,
you know, as aid insurancespecialist who handles, do you
know all I see? Just like apoliceman who sees traffic all
the time, he's that's all hesees. So to him, everybody is
decided to see Right, right?
That's your world. That's myworld. So somebody else's father
saw my world, and he was like hewas overwhelmed by what he's
been seeing. And he's been evenseeing it now for five years,
(04:25):
okay? And this is the point ithas been going on since COVID.
And what COVID has done, it gaveus a sense that we are not in
control, okay? And since COVID,over the past five years, we've
all had this feeling of not incontrol of our lives, you know,
which creates anxiety and allthese different things inside of
(04:47):
us. Now, when you have anxiety,when you are suffering, the key
to the whole thing is takeaction. So when you want to do
something, yes, you got to dosomething like every morning.
Saying, you know, I sleep and Iworry and I get up in the
morning, I take a walk. I takean hour walk, come back, feel
refreshed. I'm ready to go. So,as humans, you know, whenever,
whenever we feel lost and out ofcontrol, we have to take action
(05:09):
in the community. Associateworld, action means I gotta jump
in there and do something. Youknow, the problem, stir up the
pie. And that's what created theproblem in the past five years.
That's what he missed. Numberone thing that he missed was the
fact that everybody who lives inCommunity Association, not
everybody, but people who livein community association, has
that feeling of, you know, outof control because of society
(05:32):
and COVID, everything like that.
And so what they're doing now issaying to the boards, guess
what? What do you mean, youknow, I can't have a pet. Or
what do you mean, I can't dothis. And who do you think you
are? And tell me about thedocuments. And so now they went
from that that level, and nowall of a sudden, boom, they
(05:54):
created this, this, this massiveinternal struggle, that that's
where it all come from.
Robert Nordlund (06:00):
Okay, well, I'm just thinking about community
associations in general, andit's built on the understanding
and expectation that there'sgoing to be volunteer board
members who put in the work, putin the hours, to lead the
association, and almost bydefinition, except in very tiny
associations, the people beingled, there's going to be more of
(06:21):
them than the people leading ina 50 unit Association, 100 unit
Association, you got, what, 45people, or 95 people that are
following, and they're the onesthat are anxious. So if you're a
board member and you're feelingthe heavy burden, then, yeah, go
out, take a walk, but or Callyour attorney, or call your
manager, call your other boardmembers, figure things out. What
(06:43):
do we need to do to help ourassociation? But I can see that
the majority of owners arewondering, okay, what can I do?
Yeah, does it really say that inthe governing documents Exactly?
And they turn to Attorney Googleand things like that, and
(07:04):
they're wondering, and
Kevin Davis (07:06):
that's how remember we talk. We say that the board
has a responsibility to enforcethe rules, maintain the
association and collectassessments, and that's what
they've done forever. But nowwhat happens is, because of
that, that heightenedexpectation, they called I need
to take action as a unit owner.
Guess what? I don't believe youhave the authority that passed
that special assessment, becausespecial subject is what special
(07:27):
and he does it six months ago.
Who do you think you are, youknow? And guess what, those
trash cans. And he mentioned Ed,mentioned the trash cans. And
the one thing is, yeah, peoplesees trash cans for more than 48
hours, and they got to be inthere. It takes, they have to
take action. And that's theproblem. It take. You got to
take action, and you feel likeyou have some sense of control.
(07:49):
Yeah.
Robert Nordlund (07:50):
I'm thinking back. Do you remember an episode
we do? It did with George Nowaklong ago, yeah. And the thing
that surprised me in that he wastalking about how it's
impossible to be perfect as aboard member, and I, I was
wondering about that. I wantboard members to strive to get
it all right, but just thenature of being human is you're
(08:13):
going to get something wrong.
You're going to get anotification late for the next
board meeting. You're going tothe trash company is going to
move collections from 2p or twoo'clock or Tuesday to Wednesday,
and all of a sudden it'supsetting the entire apple cart.
And you had nothing to do withthat as a board member. It's
outside circumstances. And sopeople are, as you say, uneasy,
or more uneasy than they were afew years ago, and we're
(08:37):
struggling to hold on to, okay,what, what can I hold on to? And
what did we learn when we werekids? The only thing that's
constant is change, andsometimes that is somewhere
between medium and veryunsettling.
Kevin Davis (08:53):
I mean, just think about before COVID, right? We
come home, we get up in themorning and go to work, come
home, four or five o'clock, wehave dinner, watch a little TV.
But now, at two o'clock in theafternoon, we're sitting at our
desk. We're watching we'rehearing pickleball outside. You
know, we somebody smoking upunder my window. They should be
smoking. You know, the dog isbarking because they have a
(09:14):
COVID pet that they at work.
These are the things now thatwe're looking at in community
associations that we haven'texperienced before. As a result,
we're heightened, and then we'reanxious, and anxious means we
got to take action.
Robert Nordlund (09:27):
Okay, with all this. Now you're in the DNO
industry. My kind ofunderstanding has been that,
don't most associations have DNOinsurance? Or is it all? All
associations
Kevin Davis (09:38):
right now and today, they all have it now
this, let's talk a little bitabout what DNO and we talk about
it's directors, and alsoliability and insurance. You
have a liability policy if youget into an accident in your
car, so you got Bolly injury, ifyou hurt somebody, and probably
damage if you if you have damageto your car, got it. Well, what
you have in the communityassociation is DNO protects you.
(10:00):
Against decisions that you'vemade or decisions you didn't
make. So that's what you'retalking about. So is that you as
a board member, you have to makedecisions. Okay, that's your
that's your entire job. That'syour entire job, and it's
usually about the three things Imentioned, you know, enforcing
their documents, you know,maintaining and collecting
dollars, three main jobs. Okay,now, if you don't do it, or the
(10:23):
perception, if you don't do it,guess what happens? Or you get
this perception, you've done itwrong. It did it wrong, yeah.
Now, historically, that's beenwhat it was. And it used to be
something really serious, like,all of a sudden, you know, wait
a minute, I looked at thebudget, and the budget is not
done well. And, you know, theCPA miss some numbers, I mean,
(10:44):
or there's a theft there, or,guess what? The rules you have
are outdated, you know, we needto update the rules,
Robert Nordlund (10:50):
you know. Or you didn't count the ballots in
front of witnesses or something.
Yeah, yeah.
Kevin Davis (10:55):
But today's all perception, you know, I perceive
that you haven't done. Iperceive that. You know my dog I
have. You know, even though youdon't have, you're not allowed
pets in your community. I have aletter from from my doctor says
I need to have a pet. And thenthe board members, what they'll
do is they start heighteningthemselves up to it, so you see
(11:17):
lack of civility on their sidetoo, by saying, I don't care. We
get rid of it anyway. And that'stheir problem on their side,
Robert Nordlund (11:24):
yeah. And you've talked about that
elevating the temperature, whereelevating temperature, you start
getting into conflict. And thenall of a sudden, the community
aspect of us being at Happyvillas, all of a sudden, it
turns into argument. Villas,intense villas. And
Kevin Davis (11:38):
it goes back to Ed.
It was so important what hebecause he his tone was more
like he was surprised by allthis. He said, after all these
years I've been in it, I'd neverseen anything like this before.
And for me, I would see it. Youknow what? I it's every day to
me, first time you've seen it soand it goes back to the simple
thing is that as board members,you know, we have to make
decisions which is in the bestinterest of the community
(12:00):
association. We have to act. Wehave that fiduciary
responsibility. Okay? Theproblem is, is that if we get
inundated by people who says,This is unfair, you're treating
me unfair. The rules are unfair,discriminatory. You know, you're
harassing me. You're bullyingme, all the stuff that wear and
tear on that board member'sshoulders, it becomes
overwhelmed. So now they becomeindecisive, they have doubt. And
(12:21):
so now all of a sudden, theyneed to pass a special
assessment, because we place thebalconies, and guess what
happens? They get afraid, theyget anxious, and so they don't
do anything. And all of asudden, by doing nothing, it
compounds the issue.
Robert Nordlund (12:36):
You know, we've talked about the four C's, the
aspects of a board member, and Ithink we need to add confidence
in there, because when you'releading with confidence, then
people say, Oh, they must knowwhat they're doing. We teach our
new site inspectors, we're inthe reserve study business. We
teach our new site inspectors,wear your local wear, have your
(12:57):
equipment on you. Be very clear,be very professional, and look
like you know what you're doing.
Look like you belong there. Andsomeone might wonder, what's
that young man doing, takingpictures and measuring. And if
they look closely, they'll seethat they're they have logo wear
on and they Oh, well, they looklike they're appraising
something or doing something.
(13:19):
And they keep on walking theirdog, and they don't wonder,
because we walk with confidence.
And that idea of a board memberhaving the confidence I'm doing
the best I can, we got three outof five people on the board that
have decided this is thedirection we're going to go look
around. We may not haveconsensus, but we have clarity
(13:39):
that this is how we're going tomove forward. Here we go. And
Kevin Davis (13:45):
you have it goes back. It goes back to treating
them as a treating as abusiness, not a hobby, not
something we do because nobodyelse is doing it. Once we run
that board of directors, we'relooking at and go, Okay, how are
we going to bring the value ofour community association up. We
want to increase our value. Howdo we do that? How we get this
down? Okay? And if you go intothat direction now, you have the
(14:08):
confidence, because you have amessage, you have a reason for
existing, as opposed to whatnobody else is here but me, and
I'm the last one, and I'm nothere. Well,
Robert Nordlund (14:17):
Kevin, one thing I caught there was that
you use the word confidence, andwe've talked about caring, we've
talked about curiosity, wetalked about communication, we
talked about courage, and thisword confidence really struck a
nerve with me that you may notknow exactly what's right, you
may not have unanimous board,you may be uncertain, but you're
(14:40):
together as a board, You'removing forward, and you need to
act with confidence. How muchdoes confidence mean to the the
population at your communitywhen you're trying to move
forward successfully?
Kevin Davis (14:53):
And that's the key, and the way to me, you get
confidence. If you have amission, your mission is to
increase the value Associationyou. That's all we have. One
mission is to say, right now,the value my community
association should be up 10 20%higher than the one across the
street. So we're going to makesure our association is
maintained properly. We makesure we're enforcing the rules
correctly, and we make surewe're budging the right way. If
(15:15):
you do those, you have a COVIDassociation. You have people who
really walk around thatassociation and feel that they
they are in charge, and theyhave control. And that's the key
thing this whole conversation,Robert, is that if you have a
sense of control, you don't needto take any action. You can walk
through there and they can theycan complain and say, Guess what
(15:36):
those rules that you've been intrying to enforce in terms of
the pool hours or the gym hours.
I don't think they're fair, yes,but guess what? They're
consistent. They're uniform. Wewant consistency. Consistency in
our association. There's nothingmore important than that. Well,
I don't believe it is. So guesswhat? You know? I tell you what,
send us a letter, come to ourboard meeting. We're glad to
hear from you. Yeah, you're
Robert Nordlund (15:56):
treating everyone fairly. Okay, when you
say confidence, that's notwalking around like a bully, but
confidence in that we aretreating people equally. We're
trying to run this associationwell, and by golly, things are
going smooth here at ourassociation, and that confidence
leads to, I would say,community, right? Exactly,
exactly. Well. Hey, You temptedme at the very beginning with
(16:20):
talking about the cost, you'vebeen able to link the cost. Do
we have time to start that one?
Or do you want to take a quickbreak? At this time, it's time
for a break, and we'll come backand talk about the cost. Okay,
fantastic. Well, this time, it'stime to hear from one of our
generous sponsors after work,which we'll be right back with
more common sense for commonareas, and we'll talk about the
cost of incivility.
Kevin Davis (16:42):
Hi. I'm Kevin Davis, the president of Kevin
Davis Insurance Services. Ourexperienced team of underwriters
will help you when you get thatdeclination. We provide the
voice of reason, someone whowill stand by you. Our
underwriters bring years ofknowledge to our clients that
can't be automated by technologyor driven by price. As a proud
and wins company. We bring truevalue to your community
(17:05):
association clients. We are yourcommunity association insurance
experts,
Robert Nordlund (17:10):
and we're back.
Well, Kevin, tell us about DNOclaims and costs.
Kevin Davis (17:16):
We talk about costs and we talk about insurance
dollars. This is real dollars.
Amount. What we're talkingabout, there's two types of
losses, severity losses. Thatmeans you're spending millions
and millions of dollars. Okay?
Then we talk about small losses.
Let's talk about the big onefirst. And I love to always
start with something simple,Robert, you remember the lady
that McDonald's for the hotcoffee yard? Right? Oh, right.
(17:36):
Long time ago, long time ago,the amount of damages was $3
million okay? And $3 millionchanged the world. Everybody
thought the most outrageousname, how dare you the lady got
second. Oh, I can't believe howhorrible this. Well, a couple of
years ago, Starbucks had thesame thing happen for $40
million
Robert Nordlund (17:56):
All right, so talking about awards getting
big, yes,
Kevin Davis (17:59):
and what we call an insurance world is social
inflation. You know howinflation that's coming into our
world right now, because you'repaying more well in insurance
world, liability claims haveincreased. So went from $3
million to $40 million so itwent up 10 times. And that's the
problem with insurance today isthat when there is a liability
(18:23):
claim, when somebody is beingwhen you're suing you, you're an
auto accident. Right now, eitherwe relate to Bodi injury or
property damage, those twothings, and people, when that
happens, you see thosecommercials, win big. You win
big. You win big,
Robert Nordlund (18:36):
big. Call this number, and that's it. We'll
fight for you. We'll
Kevin Davis (18:40):
fight for you. And you know how many lawyers we've
received since COVID? Lot of youwent back to the law school and
said, I'm gonna become a lawyerand make a lot of money. Okay,
they are so many lawyers outthere, and they're the ones who
say in the commercial, had thishappened to you? You've been
treated unfairly. Have you beenharassed, discriminated? Have
you been bullied? You know, ifyou have call this number, and
(19:02):
we will see you get paid. Andwhat happens is now that $3
million announce worth $40million 100,000 is now worth,
you know, 3 million, and that'swhat insurance problem comes
into play. We have to decide howmuch to charge you now, you
know, because you know, you havethese jurors in there who loves
giving awards out to people whothink they've been harmed and
(19:25):
now not damaged so much, butharm. They've been harmed,
emotionally harmed, physicallyharmed also. But the days are
gone when we thought that youhad a million dollars. Was a lot
of liability. It's not anymore.
Robert Nordlund (19:39):
Well, I want to catch something that you said.
There the emotional damage. Now,if you get coffee spilled on
you, and you have burns, thenyou have medical bills, and
maybe you miss some work, and soyou have some loss of income. So
there are some economic there'ssome real dollar losses there.
But when we're talking abouthere and tension and a dog. Dog
(20:00):
and harassment. How do you put anumber on that? Or do you even
put a number on that
Kevin Davis (20:05):
that the judge, yeah, we in a courtroom, the
jury puts a number on that. Howmuch? How much has this person
been harmed in the community?
Okay, I know that a person can'twalk his dog out there anymore
because you label the dog assomething that's unfit,
shouldn't be there, even though,exactly ferocious, exactly, you
know, but I have a doctor's notesays my dog should be there. So
guess what? I'm going to file aclaim against you because you
(20:28):
harmed me. Okay, yeah, and thosewhen you say harm now, all of a
sudden, you have, you know,lawyers on now the phone saying,
well, guess what, we want to goright to the insurance carrier
and say, All right, let's sweat.
I see you have a $5 millionpolicy or $1 million policy. We
want $5 million right now. Nowinsurance company gonna say, no,
(20:48):
no, you're not gonna get $5million you gotta be kidding.
And then all of a sudden theymay get $2 million or $3 million
you know, historicalnegotiation. It could be it
could be negotiation, buthistorically it was 300 $400,000
now they talk in terms ofmillions, and the problem is, is
that Cuban Association don'thave those kind of limits
available. They don't have 1020,$30 million of coverage out
(21:13):
there. They have a $5 millionlimit on their policy. So what
happens is that again, and justthink about what happens if you
don't repair your roof, and roofleaks and destroyed. Some
paintings on the wall. Now, allof a sudden, those paintings on
the wall you may have boughtfor, you know, a couple $1,000
they're worth, what $100,000
Robert Nordlund (21:31):
I mean, you know, the values
Kevin Davis (21:35):
and everything has increased. You know, my car all
of a sudden, you know, there'swater dripping in their garage.
My car is worth a lot moremoney, and I can't use my car,
and it's pain and suffering.
Yeah, and you live in acommunity association, you see
the news all the time. You seepeople getting these huge
judgments and huge awards. Sothey pick up one of those
lawyers that you see 1/8 andgeneral call lawyer, and you got
(21:57):
them on the phone, and whathappens is the insurance costs
go up so that this theliability, not just the
judgment, but now the costs goup in terms of either hire my
lawyer I may have to hire in thecommunity association may hire
two or three lawyers. Forexample, you know, Ed said that
they had three elections in oneyear. Okay, well, someone has to
(22:18):
determine which one thoseelections are the legitimate,
which one those boards arelegitimate. And guess what
happens? They start suing eachother, and the judge have to
determine the cost in it. Howmuch should that cost the
insurance company? Because nowof a sudden, if these are
directors and officers, theseare directors and officers, and
these are directors andofficers, you have to defend
them all until the judge says,Guess what, you're the real one,
(22:38):
and then at that time it stops.
Robert Nordlund (22:43):
You got me rubbing my forehead? Yes, okay,
I don't want you giving too manyideas to disgruntled homeowners
who are listening. We want tohelp board members here so
there's higher awards. Yes,there's mistakes that can be
made. Yes, we want to encourageconfidence. We want to encourage
(23:03):
community. We want we've said itso many times. We want to
encourage lowering thetemperature and saying and
transparency. We've got nothingto hide those kinds of things.
But still, I want to get back todo you have a number in your
brain for how much thisincivility has cost us. That has
(23:24):
insurance premiums, DNO,insurance premiums gone up by X
percent,
Kevin Davis (23:31):
okay? There's two parts to the economic that the
dollars amount, large losses,okay, and then the small losses.
The small losses are the oneabout the trash, the trash cans
being out, or the pets that cost30, $40,000 maybe $50,000 Okay,
so now you have an insurancepolicy that you're getting for
$2,000 and we're starting to seea rash frequency. We call it
(23:55):
frequency claims, where theboard is being sued, because
people feel they've beenmistreated. So all of a sudden,
right now, we're doing okay, anda lot of our competitors are
doing the same thing and saying,Where are these claims coming
from? What party United Statesare seeing more of these type of
claims anywhere else, and thoseparts of the of the country that
(24:17):
are seeing more claims, we haveto make decisions in terms of,
what do we do about it? And ourdecisions always based on three
things, a raise rates. Two, puta deductible on there or put
exclusions in there. And so theinsurance companies right now we
do is say, Okay, from anexclusion point of view, we know
every Association has that oneguy in there that caused a lot
(24:39):
of trouble, we will exclude himfrom coverage. So every time
that person sues the board, theboard has no coverage, so the
board has to take responsibilityfor that person's actions.
Robert Nordlund (24:51):
That puts pressure on the board to use kid
gloves when they're dealing withJoe in unit number 13, a joint
and. But Jonah union number 13and they all in the back of
their minds, put a clock ontheir brain that they hope Joe
moves out. But in the meantime,Joe and unit number 13, they
need to be polite. Maybe that.
Maybe that's it. It forces theboard to be polite, to answer
(25:12):
their emails in a timely manner,to be patient to smile at them
when they're walking around. AndI almost want to say, do what
they should always be doing.
Kevin Davis (25:30):
That's the whole point. That's why I got excited
about today's topic, becausethere is a cost. There's $1 cost
to the insurance. But insuranceis saying, guess what, we want
you to participate in that lossfrom now on, you know, if
there's a loss against somebodywho we're not insuring, you have
to cover that. So you will, youwill do a better job in that one
person, or we will put a higherdeductible there. So if there's
(25:52):
a loss a DNO claim, we may put a$10,000 deductible on there and
say, Guess what? You pay thefirst $10,000 and then we will
pay everything other than that,because right now I'm concerned
about the frequency of claims,the frequency of harassment,
discrimination and bullyingclaims we are seeing because
people feel they're not beingheard, they're not being treated
(26:15):
fairly. So there are ways thatwe can do from the insurance
company to say, Guess what, yourparticipation in this will help
you do your job a little bitbetter. And that is the
direction that insurancecompanies are going right now,
do your job a little bit better.
Because guess what? That claimcomes in, he may not be covered.
You may not be covered. Youknow, deductible be high enough
(26:35):
where you have to participate inthere to do your job just a
little bit better.
Robert Nordlund (26:42):
Got it. There's another voice in the back of my
head so many times when I'vespoken to you in the past, it's
this voice that says insuranceis for accidents, not for known
things. And you've preached tome that you've got to maintain
your property because you don'twant to invite a roof leak, you
don't want to invite a slip andpull slip and fall hazard. You
don't want to invite a gatebeing open. So it's the pool
(27:04):
presents itself as a hazard. Andso if you know Joe in unit
number 13, is a known hazard, doyou need to step up? Because
that's no longer an accident.
Joe is just the kind of guywho's no offense to Joe in unit
13. You're out there. Thatperson just is has a hard time
with living in community, and sothe board's got to step up,
(27:25):
because, again, Joe's not anaccident. He's a known issue,
and that's what
Kevin Davis (27:32):
insurance companies are doing across the board. Now
for community associations, mostof the associations out there
have water damage claims, thenumber one type of claims, and
community associations, waterdamage, pipes break over,
toilets overflow, right? Sowe're saying is that, guess
what? If you have a claim ofthat nature, you have a $25,000
deductible, then all of asudden, whoa, wait a minute.
That's way too much. That'sokay. So now the boards are
(27:55):
participating and saying, theseare things we're doing to make
sure we don't have water mix
Robert Nordlund (28:00):
maybe. So we're talking about being proactive
and maybe sending a maintenanceperson or a plumber to inspect
the water heaters, or would anassociation hand out a higher
level or new washing machinehoses? Exactly,
Kevin Davis (28:17):
okay, yes, there are things that there's a lot of
things they can do right now tolimit their losses. Okay, an
insurance company is saying,guess what? We're not only
raising rates, but we're goingto hold you accountable. Make
sure you do your job, becausethe insurance policy not a
maintenance contract. We're notthere in roof leak or you have
these issues, we want you tomaintain it, and we're there if
(28:38):
there's an accident, somethingcalled Southern accidental, you
know, a sudden accident. Hey,we're there, but it was wear and
tear. We're not there. On theDNO side, it's the same thing.
It's becoming the same thing,because we know, if you treat
people fairly, if you have open,honest communication, and guess
what, somebody sues you becausethey believe you would act it
(28:59):
improperly. You didn't followthe rules where you should, but
you believe you did. Thosepeople we want to defend. We
want to defend the boards outthere that are doing the job
they should be doing, and theones that are not doing the jobs
we're saying. Guess what? We'lltake a pass on that board,
because that one person thatassociation is going to
continually give us problems dayin and day out. You know, I
Robert Nordlund (29:22):
had a couple of questions here as I was
preparing for this interview.
What can boards do to actuallylower the temperature? And you
just went through it, treat themfairly open and honest
communication, and then do yourbest to and you've given me
those three things always, toenforce the rules, maintain the
association, collectassessments. If you're doing the
right kind of things, you'restacking the odds in your favor.
(29:43):
Okay? And then
Kevin Davis (29:46):
when there's a claim, comes in, and guess what,
you get defended. You paydefense calls. Life goes on is
over.
Robert Nordlund (29:52):
You make it sound so simple.
Kevin Davis (29:54):
That's why I called you when I heard civility is now
is a point in time where peopleare. Recognizing that there's a
problem in communityassociations. We've been seeing
it for five years now. The daythe lawyers are seeing it,
they're saying boards, you haveto do something about it,
because it's becoming a aserious problem.
Robert Nordlund (30:12):
Got it okay? So you have some claims that you
call the severe ones, andthey're getting bigger because
of social inflation. You havesome claims that are the small
ones, and they're notnecessarily getting bigger, but
they're getting more frequent.
So you need to do what you cando to minimize those Okay, I
like putting it back into theboard members hands and having
them leave this podcast episodesaying, Okay, there's something
(30:33):
I can do to keep that insurancecost, to keep a lid on it. We
can treat people fairly open andhonest communication. And if
they're not taking notes, I'llput it in the show notes,
enforce the rules, maintain theassociations, collect
assessments. You got it? Kevin,thank you. As always, it's great
talking with you. Any closingthoughts to add at this time to
(30:57):
put a bow on this conversation?
And
Kevin Davis (31:00):
I think, I think you nailed it, open, honest
communication, I guess, gets youa long way at this being
confident. Confidence, you knowyou're doing your job for one
reason. You want to improve thevalue Association.
Robert Nordlund (31:12):
I like that confidence is one of those magic
words. Well, we hope you learnedsome HOA insights from our
discussion today that helps youbring common sense to your
common areas. Thank you forjoining us. We look forward to
bringing many more episodes toyou, week after week after week,
we'll be here. It'll be great tohave you join us on a regular
basis. Spread the word.
Announcer (31:34):
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(31:56):
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the views and opinions expressedin this program are those of the
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(32:18):
about the community,association, industry, you'll
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