If you live in a condo, and you are considering getting a pet, then you are up against it on two fronts. One, your condo has rules. Most condo’s are not pet friendly, or at the least they are tolerated. Then if you get your pet accepted, then you may be blackballed from the
I get asked condo questions daily in my work as an insurance agent. So I decided to post a few in a series called ” dear Mr Condo Insurance” These are not meant to be the be all and end all of all answers, and they should not have any reflection on my work at
How do you COPE with your condominium insurance? The point is that the way an insurance company looks at you and your risk is based on C.O.P.E. They look at 5 basic areas to evaluate your risk potential C- Construction, what is your condo made out of? wood, brick or a highly non combustible material
The terms of the average replacement cost provision on your policy call for repair or replacement. It is usually defined in the policy as the cost to replace the damaged property with materials of like kind and quality, without any deduction for depreciation Now the battle begins. Example: Your roof is damaged. Actually, a third
People and entities being named on someone else’s policy is nothing new. People ask this to transfer the risk to someone else. If you lease a space, you will be asked the name the landlord, if you rent a hall for a party, you will be asked to name the hall as an additional insured.
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.
- Blank checks made out o no one or to cash
- Kickbacks from vendors and property managers
- Rigged bids. Are you seeing all the bids? is someone steering contracts?
- Phantom employees
- Bills and invoices from companies you never saw or heard from.
- 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.
How does your condo property manager affect your insurance?
- They make the decisions for you
- They may know more than you
- They deal with vetted agents and companies
- they require you to buy coverage for them through your policy, like being named as an additional insured on the liability policy, the fidelity policy and the directors and officers policy.
- They choose the contractors, remediation teams and maybe the public adjuster after the loss.
You put a lot of faith and a lot of money into your property manager, so choose wisely.
The top selling condo’s in Boston include some of the most posh addresses. Many that you would expect.
But When it comes to insurance, do you get what you paid for?
First the list, Ten sales but only half as many buildings.
- The heritage 7.1 Million
- The mandarin 7.0 Million
- Clarendon 6.5 million
- 3 Commonwealth 6.5 Million
- The mandarin 6.3 million
- 50 beacon Street 6.25 Million
- Clarendon 6.225 Million
- Clarendon 5.9 Million
- Clarendon 5.7 Million
- 3 Commonwealth 5.75 Million
So what is the point! I guess it is that people have a lot more money than me. But the real point is that after spending all this money, it would amaze you that this huge investment is not insured properly.
In most cases, if you add up the sales prices of the building and compare that to the insurance policy insured value, it has little or no relationship.
For all you smarty pants, I know that you do not insure for the sale value, but for the actual replacement value. That being said, my guess is that each one of these buildings may be underinsured.
If you paid 7,000,000 for a property and saw that you had $3,000,000 in coverage, I would think that this would be cause for a raised eyebrow and some questions.
Protect your assets, and let me know when the housewarming party is.
An insurance policy is a contract between you (the condominium association) and your insurer.
You both sign off on the contract. You pay the consideration or the premium for the contract and the Insurance company agrees to pay you when they feel that the contract terms have been met.
So why is there so many arguments over what is covered? The terms are pretty much the same, and almost every line has been reviewed and argued in court. It should be a little more black and white to me.
I just finished reading a judgement on a court case
The lengthy case basically says that the unit owners were seeking coverage under a section of the policy that did not meet the contract. They were looking for coverage under a property claim and a bodily injury claim under the directors and officers section that does not cover those types of claims.
That is a lot of legal mumbo jumbo, but the underlying issue here is that it is a contract with specific terms and you can’t expect to get paid for something that you were not contracted for.
the long and short of it is that the court said that Travelers was right and the language was not un ambiguous. Now the next time someone ( unit owners) thinks they are right, They will try it again. The strange part is, that it might have a different outcome.
So WHY is the contract so complicated?
It is our nature to want stuff. It is natural to want what the other guy has.
So we go out and get it without much thought. We just want it! Just because.
Look in my kitchen to see what I mean. At some point I had an epiphany that came to me and said that I have to have a bread machine, a make your own soda machine, a frydaddy, and a waffle maker. Don’t even get me started on home fitness stuff that my wife had an epiphany about including the thigh buster and the butt cracker.
We think about the cost, we think about the usage ( always divide that by two or more) But do we ever think about the insurance.
The answer is no.
Let’s look at pools and playgrounds:
- Liability, liability and more liability. Pools should come with a lawyer along with the directions and water.
- property insurance- Did anyone think to cover the property? probably not.
- Directors and Officers- What happens when the second guesser says ” why did we do this and who made this BAD decision” Oops!
- Likeability- What happens when your insurance company who used to like you, doesn’t like you any more? And if they like you still, you will pay for it for sure.
The point is that you want it, you have to have it, and you more than likely will get it ( Think thigh master). But, before you do, think about what you will need for insurance, and how it will affect the association.
As always good luck and be smart.
I wish I had a dime for everyone that has said this over the years?
The FHA and Fannie mae can control your lives.They tell you what to do and they expect complete compliance without exception.
So What is FHA looking for when it comes to insurance?
In reality, nothing more than what you should have and what is prudent. The only problems arise, when they try to interpret what you have given them. Their terms and nomenclature seem to differ from the insurance industry.
Here is what they require:
- Hazard insurance this is your basic property insurance for fire and other perils. They require 100% replacement cost ( this is one of those terms where the problems start )
- Liability insurance standard stuff that we all have with a $1,000,000 limit ( they don’t understand the aggregate part however)
- Fidelity (dishonesty insurance). They are selective here. They only require you to have it for associations with over 20 units. Sometimes they make you add the property manager as an additional insured. They want you to have a limit of 3 months fees and enough to cover the reserves. ( You can see that this floating number can be an issue)
- Flood- If the FHA thinks they can figure out flood insurance, I might hire them, because the other government entity that is more beaurocratic than the FHA if the NFIP. More letters means more confusion. You need it, up to the replacement cost, but the NFIP won’t sell it to you in all cases. They also won’t let you buy it on your own, the association needs to buy it. So, like in my condo, the other owners ( no mortgages ) don’t want it, or they don’t need it ( above grade floor) you have no choice but to go on your own for it.
These are the basic requirements, and they are fair, and you probably already have the coverage, but just wait till they have to approve it. If it is not in their language, WATCH OUT!
It is the FHA’s game and you have to play by their rules, or you do not get approval. More than 30% of all condo loans are FHA backed and approved.
Can anybody tell me how I am covered for insurance at my condo?
I hear it every day, it is a fair question, but no one seems to be able to answer the question.
You ask your unit owner policy agent, and they say ” it depends on the master policy, or check your by-laws”
You check with the master policy insurer and they say check with your unit owner insurer, or check the by-laws.
You either check the by-laws, at which time, you are more confused, or you give up and cross your fingers like most people, and hope for the best.
This stinks, it was like when you were a kid and you wanted to take the car and dad says ask your mother, and mom says ask your dad, and when you go back, they both say whatever, if mom has no objections, or ok if dad says so. Then you get in an accident and they both blame each other. They each say, you always give in to him, you can’t ever say no, or give him a straight answer.
Sounds familiar right? Same thing with your condo unit owner insurance. you get the run around, you never get a straight answer, and everybody is to blame when there is a accident or loss.
Make sure that the professionals that you hire and get paid give you the straight answers. It is the least they can do.
The Holidays are upon us and with that brings risk.
What is risk? Risk is an insurance term for the chance that something might happen.
What could go wrong at the holidays and Christmas?
1. Live errr dead and dry Christmas trees indoors.( have you ever lit fore to a dead Christmas tree? they go up like a bomb)
2. Over loaded sockets. More lights, more cords, more chance of an electrical fire.
3. fireplaces. We look at them all year until we think we need to have a little holiday ambience. Then we realize that the flue has not been cleaned in years, or that there are wholes in the brick that release sparks into the condo.
4. We go away. What better time to see the relatives out of state, or go on vacation to get away from all the nonsense. Did you keep the heat on? Did you turn off the water to the washing machine, did you secure the condo from thieves?
These are a few things to keep in mind at the holidays at your condo unit and association.
Happy Holidays from the Condominium Insurance review
Keeping you safe and informed 365 days a year.
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In a recent article from The CAI Law Reporter it was reported that the courts in Florida awarded a condominium amounts outside of the coverage provided by the insurer based on condominium law that states what the condo is required to carry and what they should carry for coverage.
The decision was since turned over, but here is the rub. Are we supposed to carry all the coverage that we are required to on our master deed and cc&r”s? Are we supposed to adhere to the various state codes? Or can a condominium board use logic and judgement to get the best coverage at the most reasonable pricing that fits the budget.
I vote for the latter. let the board decide what is best and reasonable. Although, if you think you need coverage for something, you probably do, so buy it.
In no way do I think a court can make an insurer provide coverage for something that a board did not buy. The court overturning that decision appears to be the right one.