Silicon Valley replacement costs, a fault line under the valley, and a balcony-inspection deadline that has already passed.

San Jose sits in the middle of Silicon Valley, and the same land and construction costs that define the housing market define the insurance problem: the cost to rebuild a townhome or mid-rise condo building here runs well ahead of what boards often carry as an insured value, because the number was set years ago and never fully caught up to local rebuild pricing. An underinsured master policy in a high-construction-cost metro is the quiet exposure, because a coinsurance penalty or an agreed-value shortfall only surfaces after a total loss, when the association is trying to rebuild at current San Jose numbers.

Two things then sit outside that master property policy and have to be handled on their own: earthquake, which the standard master form excludes, and the exterior elevated element inspections that California now mandates. Both land on the same aging townhome and condo stock that makes up much of the valley's common-interest housing, and both have become part of what the dedicated community-association markets ask about before they quote a Santa Clara County association.

Local / Earthquake

Earthquake is a separate policy, and declining it is a board decision that should be on the record

The master property policy on a San Jose association excludes earthquake, the same way it does everywhere, which means seismic coverage is a distinct placement with its own limit and its own deductible. Santa Clara County sits in one of the more active seismic regions in the country, with major faults running through and around the valley, so the gap between what the master policy covers and what an earthquake would actually do to a building is wider here than in most of the metros this class of association operates in. Earthquake coverage comes either through the California Earthquake Authority or through the private earthquake market, and the deductible is written as a percentage of insured value rather than a flat dollar amount, which on a high-value Silicon Valley building means a large retained layer the association has to be able to fund before the policy responds.

Because the coverage is expensive and the deductible is high, many boards choose not to buy it, and that is a legitimate decision, but it should be a documented one. An association that formally votes to decline earthquake coverage, records the decision, and discloses it to owners is in a very different position than one that simply never placed it and cannot say why. Lenders and the association's own governing documents may also speak to whether earthquake coverage is required, so the first step is to read what the CC&Rs and any loan documents actually say before treating the decision as purely discretionary.

Local / SB 326 and Davis-Stirling

SB 326 balcony inspections and the Davis-Stirling coverage floors are now underwriting items

California's SB 326, codified at Civil Code section 5551, requires condominium and other common-interest associations with buildings of three or more multifamily units to have a licensed architect or engineer inspect the exterior elevated elements, balconies, decks, stairways, and elevated walkways, that rely on wood or wood-based support. The first inspection deadline was January 1, 2025, and the inspection then repeats on a nine-year cycle. For San Jose's stock of townhome and mid-rise communities, many of which are old enough to have wood-framed balconies and walkways, this has become a live underwriting question: the dedicated community-association markets increasingly ask whether the 5551 inspection is complete and whether any identified deterioration has been repaired, and an association that is behind on the inspection or sitting on unaddressed findings presents as a harder risk to place.

The Davis-Stirling Common Interest Development Act, at Civil Code sections 4000 and following, is the framework the whole program sits inside, and one section speaks directly to how much coverage a board should carry. Under Civil Code section 5800, volunteer directors and officers get personal immunity from liability only if the association maintains general liability and D&O coverage of at least $500,000 where the association has 100 or fewer separate interests, and at least $1,000,000 where it has more than 100 separate interests. Those are statutory floors, not targets, and for the larger master-planned communities common in San Jose the higher $1,000,000 threshold is usually the one that applies. A board that reviews its D&O and general liability limits against the section 5800 floor, keeps the SB 326 inspection current, and treats the earthquake decision as a documented board action is presenting the kind of file that the specialty markets writing this class actually want to see.