EDGEWATER ISLE SOUTH
November 16, 2007
have all received further communications questioning the Board's decision to
continue to maintain earthquake coverage. We think an optimum way of explaining
the importance of this decision to all of us is to describe some of the factors
the Board considered in determining to maintain earthquake insurance at the
present price and coverage levels:
of Our Community:
Edgewater Isle South is located on soft soil, and the buildings are comprised
of 3 story buildings. The Board has information that the soft soil type that
Edgewater is located on could amplify shaking in the event of an earthquake.
The Board is concerned that these two factors contribute significantly to the
likelihood of loss.
2. The Potential of an
We all know that California is earthquake country. Published U.S. Geological
Survey reports predict a 62% probability there will be a 6.7 or greater major
earthquake in the Bay Area between 2003 and 2032. http://pubs.usgs.qov/fs/2003/fs039-03
In the event of a major loss, our CC&Rs provide a mechanism to obtain the funds
to rebuild. They start with insurance but, beyond that, largely rely on special
assessments of the membership.
(CC&R Article IX, Section 5.9).
you can see, in the event of a major earthquake loss, our homes and individual
financial picture could be dramatically affected if we do not have insurance
these reasons, the Board continues to believe that obtaining earthquake
insurance for Edgewater Isle South while it is available at the price and
coverage we have is important to the financial well being of our membership.
owner has questioned the quality of our current earthquake insurance and
whether the Association ought to use the services of one of the Association's
members to advise the Association about insurance products. The Board is aware
that one of our members has experience in procuring insurance products and did
consider alternative suggestions. One suggested insurance product, however,
would only cover a residential building of up to four units, and only one
building. If it obtained such insurance, the Association could either end up
significantly under-insured or might need to under-represent the size or
insurable value of Edgewater Isle South. Another suggested product - private
insurance for multi-residential housing - is untested. A third suggestion was
that all of our
insure their own units against earthquake loss, but whether all owners would
obtain such insurance would not be something the Association could enforce or
guarantee. With a master policy of earthquake insurance, we know we have that
layer of coverage for everyone.
Board looked at each of these ideas but did not conclude that any of them was
desirable or without risk to the Association. After considering all
perspectives, and in the exercise of its business judgment, the Board did not
believe that obtaining earthquake insurance through one of the Association's
members best served the Association.
Through a competitive bid process, the Association chose
a competent common interest development insurance specialist to broker
insurance for the Association. Our earthquake insurance policy is with a
company that demonstrates strong capital reserves and an AM Best Rating of
"A+11." A company with strong reserves and a top quality rating is a
more important qualifier than being a California-admitted carrier when it comes
to having confidence that the insurer will cover losses in the event of an
earthquake. The Association is insured by such a company.
Board believes that obtaining a traditional form of earthquake insurance is
prudent and in the best interests of the Association and all of its members.
The Board is charged with making prudent business decisions for the
Association, including the selection of insurance experts that it considers
most qualified to advise the Association and the Board. The Board of Directors wants to
thank you all for your continued encouragement and support in protecting our
homes and investments at Edgewater Isle South.
Board of Directors
Edgewater Isle South