Tag Archive for association

10 questions to ask when insuring your condominium association

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:

  1. Is our policy all in all the time? What are the restrictions, and does it dovetail with my bylaws and master deed?
  2. Do I have enough liability insurance? Do I at least have $2,000,000 per occurrence?
  3. Do I have a retro date on my Directors & Officers coverage? Do I have the coverage at all?
  4. 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.
  5. Have we had an increase in premium lately?
  6. Can we lock in our rate for more than a year
  7. What type of replacement cost coverage do we have?
  8. Are we insured to value?
  9. Are our finances covered? loss rents and maintenance fees?
  10. How many different deductibles do we have?

Bonus question:

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.

How to get an insurance quote for your community association


neighborhood association insurance needs

I live in a condo and we have our own insurance needs.

But what do you need for insurance if you have a neighborhood association?

There are 1000′s of neighborhood associations around the country. These associations bind a community together and create guidelines for living and a place for community involvement.

What are the risks?

  1. people
  2. property
  3. liability

Take for example a urban neighborhood association that forms to bond a 10 block radius of people that own their own homes or units. They band together for a common bond and sense of community.

What do they need for insurance? Let’s assume that they are a serious and real association, with rules, guidelines, officers, meetings and events.

Insurance needs are:

  1. Directors & Officers liability- protecting the board against improper decisions, or claims against them
  2. property insurance- do you have an office, own real property? Then it needs to be protected against fire and theft
  3. liability- Let’s face it, people injure themselves and sue, and you create property damage and people sue you.
  4. Special events- wine tasting parties, block parties, charity functions,dances, and the pancake breakfast. Whether you rent a jumpy trampoline for the kids or not, these events all create a unique liability issue and need to be insured.
  5. Workers compensation- Do you hire anyone? Do you hire a landscaper to mow common area, or do you hire security people. If you hire people, you need workers compensation.


Board members personal liability exposures Condominium

When you sit on a board or you volunteer, you are doing a good thing and the right thing, but you are exposed and could be liable.

Where are your exposures?

  • Decision making on the board- Make sure you have a directors and officers liability policy in force. Wrong decisions can cost you money, and don’t look to your homeowners policy for coverage.
  • Personal injury- could you libel someone, could you wrongfully enter a unit? sure you could.
  • Human resources- have you ever fired someone, or hired the wrong person? You might be liable. Think about employer practices liability insurance (EPLI)
  • Injured worker- make sure you have workers compensation
  • Liquor- have you ever served liquor in your unit at a meeting? Where did the person go when they left? You might be responsible

There are any number of other exposures out there. Serving on a board does not relieve you of liability. Check your insurance coverage. Without the proper insurance, it is like walking around with your wallet hanging out of your pocket. You are sure to lose some money.


How to insure your condominiums income

Obladi oblada ” life goes on”

That is a tune from the Beatles, and life does go on, but every once in awhile, the income stream slows or comes to a halt.

What to do and how to insure against it.

Actually the biggest loss of revenue is dead beat owners who stop paying. The problem is that there is no real insurance answer for this financial loss. It is not an accident, but expected. The best you can do is manage it.

But if catastrophe strikes, there is some insurance remedy.

Maintenance fees- by purchasing this insurance, the association can look to the insurer to pick up uncollected fees do to a covered loss to a unit.

Loss of rents- some associations own a unit for which they collect rent and use this to operate the condominium. If there is a covered claim and the unit stops receiving rents during the time it is damaged and uninhabitable, then you can get rent loss coverage.

Consequential loss- sometimes there is no damage to your building, but something happens off premises that causes a loss of income. for example if there is a tsunami in Japan, and the plant gets wi[ed out. There are no more car deliveries to the dealerships in the U.S. Then there is a financial loss without a loss to the premises. this can happen to you, if a bridge is out that is the only access to your building.

Extra expense- some times the loss lingers. But when the building is back in operation, the loss of rents stops coming. This is where extra expense steps in. Or if it would be faster to expedite a part or a heating unit, then the added cost would be covered.

Condo’s have income, and like any business it is the heartbeat and blood flow of a good working association.

protect your income.

Condominium Crime Insurance

“Desperate people do desperate things”

Why do addicts steal from their family first? They love them, and the family loves them back and they trust each other. But it happens every day.

People you trust are the most likely to steal from you.

That’s right! You’re friend, you’re neighbor, you’re board treasurer, your property manager. It hurts to think about it, but it is the cold reality.


4 of kindA property manager goes out to Vegas. Has a ball, loves gambling and gets hooked. He has a system. He falls behind, loses his money, and has no place to get more to get his own money back. He knows that with one lucky spin, he will be back to even and never gamble again. He has access to your condominium funds. He “borrows” some money. In his mind he did not steal it, because he is putting it back. Of course he loses and he is forced to fess up that the money is gone and he is sorry, really sorry.


grandma theifHow about this case. the cute little old lady who has run things for 20 years on the board and who knows where every penny is and goes to church every week and never would gamble. Well, the little old lady from unit W27 has a sick grandchild who needs a vaccine shot that sells for $50,000. She needs this to stay alive. Her funds and life savings are exhausted trying to keep this child alive. Where does she get the money for the medicine? That’s right from you. Given the choice of stealing your money or a dying child, she has no other moral choice.

This is the real world.

What do you do?

You buy insurance.

The basic crime policy for a condominium complex insures the members, managers,employees and board for employee dishonesty. This policy can also cover burglary, money theft, forgery etc.

How much should you buy? What limit?

The rule of thumb is at least one and a half times the reserve funds and an amount equal to 6 months association dues.

Good luck and try not to be looking at all your neighbors with a raised eyebrow, they may just be suspicious of you.


Snow a Budget Buster for Condominiums

In the northern states, snow can be one of the biggest budget busters for a condominium complex.

condominium snow insurance

What can you do to prevent it?

  1. Properly estimate and reserve. There is data all over the internet that will tell you what the average snowfall is in your area. If you know your costs, put two and two together and you can estimate your budget.
  2. Work a deal. If you know the average and you know what your budget is, then talk to your snow removal contractor and make a deal. We will pay you this much for the snow removal. If it snows more, we win, if it snows less, you win. It is an equal gamble for both parties.
  3. Transfer the cost. If you pay to shovel driveways, or walks, transfer the responsibility to the unit owners.
  4. Assess. If you go over budget, do what we always do, send a bill out and apportion the cost to all the owners.
  5. Insurance. Snow insurance should be an option on everybody’s package policy. But it is only available through specialty weather insurance companies.

How does snow insurance work?

decide how much you are willing to pay. Decide on your threshold. and insure the difference.

  • The amount of coverage that you would like to be reimbursed typically in a cost per inch for removal or cost per storm for removal.
  • If selecting the cost per inch for removal product then a snow amount threshold would be determined such that reimbursement would kick in for every inch of snow that exceeds the threshold (i.e. if more than 45 inches of snow falls during a winter season then you would be reimbursed $2,500 per inch over that set threshold).
  • If selecting the cost per storm removal product then a number of storms threshold would be determined such that reimbursement would kick in for every storm that exceeds the threshold (i.e. if more than 3 occurrences of a 6 inch storm occur during a winter season then you would be reimbursed $150,000 per storm over that set threshold).

Use these risk management tips to avoid a budget busting winter season.