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Coverage you do not need for your condo

Insurance agents get paid by selling you insurance. The more they sell the more they make.

Is that a bad thing? NO!

Having full coverage and not having to worry when things go bad is a comforting feeling.

BUT< insure the big things and take a tighter look at the little things.

Do you need to pay extra for

  • loss assessment coverage
  • replacement cost when it is new
  • fluffy broadening endorsements
  • workers comp if you have no employees.
  • Directors and officers if everybody is a officer
  • Terror insurance
  • flood insurance on a mountain

You probably do need all these things, but when pinching a penny, do it in the right spots.

7 insurance policies not to buy   from Daily Finace

 

Theft of Condo funds

Is someone stealing your money?

You hear about it, but you never think it will happen to you.

 

Look for these 6 signs that someone might be stealing from your association.

  1. Blank checks made out o no one or to cash
  2. Kickbacks from vendors and property managers
  3. Rigged bids. Are you seeing all the bids? is someone steering contracts?
  4. Phantom employees
  5. Bills and invoices from companies you never saw or heard from.
  6. someone who is not open to letting you see the books.

There are many tell tale signs. If it looks bad, or looks suspicious, look into it.

Boston Condominium Fire

What does a $1,000,000 fire look like?

condo fire

 

 

 

 

 

condominium fire in back bay

 

 

 

 

 

condo fire damage

 

 

 

 

 

 

 

What scares insurance companies about your condo?

Or should I say W.A.T.

Water

 

Attorney’s

 

Wind

Of all the things that scare an insurance company, these three things scare them the most.

Water- water damage is the number one cause of claims

  • ice dams
  • water leaks
  • back up of water
  • burst water tanks
  • burst washing machine hoses
  • flood
  • amd more

Wind- a gust of wind can cause lots of damage

  • hurricane
  • tropical storms
  • tornado’s
  • gusts

all of these events can be damaging and catastrophic

Attorney’s- no one wants to be sued, but condominiums are sued every day.

  • trip & falls
  • unit owners sue each other
  • people sue the board
  • property damage

If attorneys do not have a case, they make a case or as it seems sometimes, they make the stuff up.

Risk scares Insurance companies. If you manage these three risks, you look much better to the insurer.

100% replacement cost insurance-condominium

What is 100% replacement cost anyway?

I get asked this question every day it seems. Mostly by a mortgage lender that needs to check off a box on an application.

What does it mean?

Most policies have a replacement cost provision. Replacement cost means that the insurer will replace without applying depreciation. Simple.

So why ask for 100% replacement cost? What is it?

Problem is nobody really knows till you replace it. It is a educated guess or it comes from a table with a calculator.

Why would someone say that yes it is 100% replacement cost? How do they know? Who died and made them the expert? Just because they used a construction estimator, or they exceeded the companies suggested insurance to value guideline, does not make them right.

So we make a valued decision. But for some property manager or insurance professional to check off yes this is 100% replacement cost is tantamount to a guarantee.

Unless you have a guaranteed replacement clause on the condominium policy, the 100% limit is someone’s (hopefully) best judgement. I guess we will not know for sure till the property is replaced.

 

condominium insurance explained zoning laws

But only part of the building was damaged!

How does a $20,000 property claim cost $100,000 to repair?

Zoning Laws continually change and can vary greatly from town to town.  Did you know that in some areas, if 25% of the building is damaged by a fire, the ENTIRE building must be brought up to code?   New codes can require the installation of hardwire smoke detectors, and sprinklers.  Not to mention updated electrical wiring, plumbing, wider doors or hall ways, handicap ramps, emergency lighting, etc…

 

But you have property insurance right?  Property Insurance has a simple purpose: to make you whole.  The insurance company can provide funds for a covered loss to build the structure back to what it was prior to the loss.  If the building had four walls and a roof, the insurance company will pay for four walls and a roof.  But the coverage is limited to rebuild what you had.   Imagine the town told you had to bring the WHOLE building up to code, even the units/areas/floors that were not affected by the loss.

 

SnowCollapseWhere does the money come from to bring the building up to new the codes?   You would need to look to the Law & Ordinance Coverage within the property section of the policy.   One of the components of Law & Ordinance coverage is “Increased Cost of Construction”.   Consultant with your insurance broker about your policy’s current limit, and then inquire what the cost would be to increase.  You will ask yourself or your broker “what is the right limit”.  This is an excellent question and not one easily answerable by someone that is not a contractor.  Even contractors have a difficult time as the codes, rules, and regulations vary by town and are constantly being updated.   One thing is sure, if the current policy only provides a built in limit of $10,000 or $25,000 then you should look into increasing the limit.

 

Guest blog by:

David Haynes

Deland Gibson Insurance

If you are looking for a condominium insurance expert in Massachusetts

contact:

dhaynes@delandgibson.com