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.
You have a master policy with replacement cost. Good! You should.
When is replacement cost not replacement cost?
Just because you have a box checked off, does not mean that every loss is adjusted the same way. Like everything, look at the fine print in your policy.
Examples of when RC is now ACV ( actual cash value) in some policies:
- You have functional replacement cost
- your roof is old and out of it’s useful life
- property damage to others
- You don’t actually replace the item or property
- Your property is irreplaceable
These are just some of the examples you will find where replacement cost is not really replacement cost.
read your policy, or ask your insurance pro.
Did you ever hear the saying
Don’t wait till you are thirsty to dig a well
The same advice can be given to the condominium association that waits till their policy come in the mail and it is 25% higher than last year, and the renewal date has already gone by.
Another reason not to wait is the association that renews and pays and pays and pays. All of a sudden there is a string of bad luck, and you have a few minor claims. The bad mews comes down that you are no longer being considered for your renewal. Now you don’t look so good.
Be proactive. Get a proposal every couple of years. Do not wait till you are desperate to take a look.
If everything is equal amongst the insurers and the agents, then stick with what you have. Like in baseball, tie gores to the runner.
2 unit condo’s are a different breed.
Have you heard the saying?
” The only thing worse than a three unit condo, is a two unit condo”
What are the insurance issues?
Condo association insurance is basically the same for a 100 unit building or a 2 unit building. The issues come from your buying power and the appetite of the insurers.
Insurers often times do not pursue these condo’s, because quite frankly there is not enough money in it. Also, they think that they are nothing more than a two family owned by two people. They have limited common area, with more area designated as exclusive use. many of the big insurers will limit their appetite to buildings with 10 or more units. Two unit condos are akin to the ugly stepchild.
Important condominium coverages like water back up, D&O, hired and non owned auto, loss of maintenance fees and many more can be expensive to buy for a small association. many times these costs are single fee based and the same price is charged for small or large associations. many times the small unit goes uncovered due to high pricing of coverage options.
Pricing tends to be higher and the costs are only divided by two parties. For example a $6,000 policy adds $500 a month to your condo fee before any other charges. This might make it harder to sell.
You might have to work harder to find the right coverage at the right price, but try not to skimp on coverage and take care of your condo. Claims will only make your search more difficult.
I was just on a discussion board on linked-in for the CAI group, and people were talking about insurance issues.
What struck me is that whether you are a red state, or a blue state, or whether you are east coast or west coast, you have unique insurance issues.
people in Florida, do not worry about frozen pipes, but they sure are concerned about wind.
A condominium in Iowa does not even consider getting terror insurance, but someone in New York and Boston does.
The only thing I can tell you is that if you are concerned about it, you probably have a REAL exposure, and the company that insures you cares too. They care enough to charge you more, exclude the coverage, or are not willing to write the coverage.
How frustrating is that?
Be prepared to ask your insurance person for the coverage that you need, and if they do not deliver, ask the next person. If it is expensive, or the company is unwilling to cover the exposure, there is a good chance you need it.
I say that a condo is a better insurance risk than a home.
Just think about the backyard hazards of a home.
- fire pits
Sure you might have some or all of these at a condominium, but not likely, and if you do, you have rules,guidelines and supervision.
There are more reasons that a condo is a better risk than a home, but i will stop in the backyard for now.
I subscribe to a number of condominium industry newsletters. One of the best is by industry leader Goodman, Shapiro and Lombardi.
GSL is starting a series on what is necessary and what you should have for insurance for your condominium association.
part one, talks about the basics and what you need to get by, and of course what makes you legal.
The highlights in this part include:
- insuring your condo association for Property, general liability,energy equipment,flood and directors & officers liability.
- What is required by Mass law 183A
- What the minimum crime coverage is required.
- Not falling into a gap with your unit owners homeowners policy ( HO-6 is the insurance lingo)
Check out their blog and sign up for their newsletter to read the rest of this series on insuring your condominium and your unit.
Who is to blame?
The condo Law Blog says this:
County officials came to the scene to evaluate all of the decks in the community and the news is not good. It appears they may not meet current code requirements and some news reports report findings that other deck collapses in the community are foreseeable.
The decks are 30 years old and it appears many have not been properly maintained. Some appear to be rotting. One news crew found a decks that was visibly sagging, suggesting that it may be next in line.
So –who is responsible to repair these decks? Of course it depends on state law and the association documents. But in many instances, the homeowner will be responsible.
The reason is that these decks are often called “limited” common elements. They are common elements because they fall beyond the “finished walls in.” But they are “limited,” because only the adjoining unit owner can enjoy them, or in this case fall from them. In these cases often it is the unit owner who must maintain, and if need be replace, the deck structure.
Some news reports suggest that this is the case in Wildwood Missouri. But everyone may not agree and ultimately a Court may have to interpret the documents in question.
Who ever is responsible aside, decks must routinely inspected and maintained. And they must be replaced when they are no longer safe. Even if common funds will not be used to do this, the Association usually has the inherent right to ensure that this work is undertaken on a regular basis.
Stuart Lieberman Is an attorney with Princeton’s Lieberman & Blecher. The firm represents community associations in New Jersey and New York. www.liebermanblecher.com
You are no expert. You might know a lot, that is why you got the job to review your associations insurance.
Let’s hope that your agent is and expert and is looking out for your best interest, and not the biggest commission.
Ask these Ten questions:
- Is our policy all in all the time? What are the restrictions, and does it dovetail with my bylaws and master deed?
- Do I have enough liability insurance? Do I at least have $2,000,000 per occurrence?
- Do I have a retro date on my Directors & Officers coverage? Do I have the coverage at all?
- Does our policy cover our expenses in handling a claim such as our time, the property managers time and charges by the adjusters we hire on our behalf.
- Have we had an increase in premium lately?
- Can we lock in our rate for more than a year
- What type of replacement cost coverage do we have?
- Are we insured to value?
- Are our finances covered? loss rents and maintenance fees?
- How many different deductibles do we have?
Are you working with me? How am I getting communication? newsletters, alerts, loss control; and a partner when we have a claim.
There are many more questions to ask your agent or company that you buy insurance from. Try these on for size to start. If you don’t get the right answers, start walking.
You are sitting around at your latest condo board meeting. You are reviewing the budget and your meager finances.
Looks like you might have to increase monthly fees again. Everyone groans!! sighs!! and mumbles under their breath.
“Hold the phone” someone says. Before we tax the owners again, let’s look at our expenses.
Running a condo is running a business.
You look at one of your biggest expenses and there is the elephant in the room. Insurance is big. Necessary, but big.
There are 100′s of articles talking about condominium insurance and 100′s of agents and companies that want your business. So how do you go about asking for a quote?
- Do go to an expert in condominium insurance
- Do put someone in charge that knows insurance
- Do an evaluation of needs before getting quotes
- Do due dilligence
- Don’t rely solely on your property manager
- Don’t rely just on your current agent
- Don’t ask for an apples to apples quote
- Don’t always take the cheapest price
- Don’t take away coverage w/o a lot of thought
- Don’t be afraid to fire a broker for not doing their job
There are many things to consider when shopping for insurance. remember that you are probably not an expert, and you rely on others expertise. The problem is that the agent is probably not an expert, the property manager is probably not a licensed insurance agent or counselor, and don’t forget that people are people and they look out for their best interest. Agents might go with the company with the highest commission, or the property manager might only use his/her buddy.
It is your money and your business, and your exposures at risk. Treat it with care and caution and do the best for YOU and YOUR association.