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What is insurance premium financing?

Insurance premium financing has nothing to do with the insurance policy itself; rather, it is a way to finance the purchase of the insurance policy. Essentially, it works like a loan.

Why does an HOA need it?

Premium financing can significantly improve the cash flow of the association. It eliminates the need for the association to pay a large amount up front to the insurance provider, freeing up funds for routine maintenance, necessary upgrades, and repairs that are needed throughout the community during the year.

Additionally, associations can have multiple insurance policies rolled into a single Insurance Premium Loan Agreement if the policy terms and dates line up. This way, the association doesn’t have to skimp on any coverage due to lack of funds.

Having the proper coverage is essential in the event of any catastrophes or unforeseen natural disasters.

Tips for Selecting an Insurance Premium Financing Provider

It is in the association’s best interest to choose a lender that:

  • Does not require any personal guarantees. This will limit each individual board member’s
    liability. The HOA itself should be the borrower.
  • Does not assess prepayment penalties.
  • Does not attach assessment liens as part of the loan terms.

Is your board considering whether or not premium financing is right for your association? Not sure where to start when it comes to choosing a provider? Contact Blue Lime Insurance Group! Our insurance experts would be happy to help you find the best solution for your community. Or…If you’re really looking into premium financing, check out our friends at Mintfish! They are hyper-focused on property management, which means they will get you.