Tag Archive for condo

What is forced placed insurance coverage.

If your mortgage company requires you to have insurance and you refuse, or let your policy lapse, then they will force insurance on you. They will pay for the coverage and bill you back.

This is called mortgage impairment coverage. It is basic, and it is expensive. You have no choice over what is covered, and it generally only covers the interest of the mortgagee.

Can you trust them?   Well, not always.

Check this out:

Wells Fargo and QBE Insurance company agree on a 19.3 million dollar settlement. Many of these are condo owners.

entire article from insurance 360

Wells Fargo and QBE have agreed to settle a lawsuit dealing with force-placed insurance policies in Florida involving 24,000 borrowers.

The companies will pay $19.3 million to compensate the borrowers.

The settlement in federal district court in Miami deals with claims that the bank and QBE overcharged homeowners in Florida for force-placed insurance. The class-action lawsuit is one of three filed in connection with alleged overcharging of homeowners for force-placed insurance, which became a huge business in the wake of the housing bust.

The two others were filed in New York, according to industry officials. Best estimates are that the business has $2.6 billion in annual written premiums.

Condominium fire damage

Witness the damage done by fire at a condominium complex in the Carolina’s.


Amazing footage of a devastating fire to a condominium complex.
What would you do? Are you prepared?

Boston Condominium Fire

A rooftop blaze in April of 2013 on Beacon Street condominium was estimated to be $1,000,000.

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

$1.000,00 fire







The cause of the fire is undetermined at this time, but there can be many causes of a rooftop fire.

  1. Careless disposal of smoking material
  2. gas and charcoal grills
  3. fireworks
  4. heating and air conditioning system failure
  5. lightning

All of these things can be managed and prevented. All of these things caused 14 families to be out on the street and out of their homes.

Smokey the bear used to say ” only you can prevent forest fires”. It is true with condominiums too! Only you can prevent condominium fires.


Condo insurance premiums are rising

I hear it every day. Why are my condominium premiums going up? Especially from associations that are loss free.

Is it fair?

It doesn’t feel that way I am sure.

But let me give you some reasons why they might be rising.

  1. Insurance is all about the law of large numbers. If statistically a class of business or a particular company has had rotten loss results, they try to balance their loss ratio ( losses/premium) by raising revenue or premium.
  2. Your individual building may have an adverse loss ratio. In simple terms, most companies would expect to pay out about 50% of the premium ( over time) that they take in. If you have been getting back more than you put in, it might be a bad equation for the insurer. If this is the case, it will be harder to find insurers, and the costs will be high.
  3. You might suddenly be in an undesirable area. you might be on the coast ( katrina and Sandy ) and subject to flood or fire.
  4. The insurance industry as a whole is in what they call a “hard market” and all property pricing is rising like the tide. We have been in a long cycle of premiums going lower and lower. What goes up must come down and vice versa.
  5. Insurance companies cost of reinsurance might have gone up. Like a condo assessment, they are just passing on the cost.

We all live in this economy and we all live in condo’s and the cost of goods keeps rising.

What can you do?

All is not lost. There are options

Insurance is a competitive business and you have options. The better you appeal to insurers the better rate you should get.

The company I work for are actually keeping rates the same and lowering the rates in some classes of condominiums. That is a product of proper risk selection and the insured condo associations benefiting from a company that is doing their job the right way and is not greedy.

So if you have options, and knowing that having no losses or losses that are acceptable to insurers for them to fight for your business, it seems clear that if you manage your losses, that you are in the driver seat.

Good luck!

How to cut your condominium insurance premium?

Cheaper does not mean better.

Penny wise and pound foolish.

If you are aware that cutting coverage and buying the cheapest policy are not always the wisest choices for your condominium association, we can look at ways to trim the fat.

Condominiums are addicted to value and cheap prices. It stems from the fact that budgets are tight, no one wants their fees ti rise, even when services are becoming costlier, and the person making the buying decision has a fiduciary responsibility to do the best thing for the association that they manage.

7 things to look at first when shaving the fat off your premiums:

  1. Are you over insured? check your values
  2. is your deductible too low?
  3. Can you live without flood and earthquake?
  4. is the policy filled with special endorsements?
  5. Are you classified right? Many times a non combustible building has a brick rate, because the agent assumed it was just brick.
  6. Are you getting all the protection credits due you?
  7. Are you paying for coverage for third parties like the property manager.

It is more important to have the right coverage than to have the cheapest policy, but if you must cut the cost, there may be effective ways to handle it. Insure the big loss and assume the smaller ones.

Choosing the right condominium deductible

When I was a kid, they had one kind of potatoe chip. Plain or original no flavors. Now you have to dig for the original. There are like 25 kinds of flavored pringles ( speaking of which, we did not have factory formed chips in the olden days either)

The point here is that people like choices, and people all have different needs and preferences.

What is a deductible?

A: it is that part of the insured loss that you assume ( self insured retention) before the insurance company kicks in and starts paying on your behalf.

So what deductible is right for your association?

$500, $1000, $2500, $5000, $10,000, $25,000 or maybe a percentage?

Things to consider when making your choice:

  1. Other unit owners opinion
  2. Are low level claims, really maintenance issues
  3. What is your risk tolerance?
  4. What can we afford?
  5. Are unit owners covered under their condo homeowners?
  6. Do you have a history of claims? If you do, take a low one, If you never have a claim take a bigger deductible and save the money
  7. Can we pass off the deductible to the unit owners

There are more things that might help you make the decision, but it is mostly about what makes sense money wise, and what your tolerance level is to risk.

If you save 10% on a $20,000 premium to go from $1000 to $5000. It might make sense. If you have a claim a year you lose! If you have a claim every 2 years, you break even, If you do not have any claims, you are saving money and it makes sense to jump up to a bigger deductible.

Weigh your options, and do the best thing for you and the other unit owners.


Condominium Flood insurance RCBAP

How do you insure flood for your condominium association?

There are options, but most of them fall back on the government and the NFIP.

If you really want to confuse someone, involve insurance and the government. Both of these entities create more obfuscation than any other industry I can think of.

So how do you navigate the flood issue for your condominium association.

First reach out to your agent or company. Let’s be honest here, most of them don’t know their ass from their elbow when it comes to flood. I admit, it baffles and befuddles me all the time. If you can, reach out to the NFIP ( national flood insurance plan). They have so much data, resources,help and brochures that it will consume you. But they are your best resource, if you are looking for the right answers.

What is RCBAP?

RCBAP stands for Residential Community Building Association Policy.

The RCBAP is set up to cover condo associations through the NFIP. You must be a condo complex, not a HOA or a PUD. You must have at least 75% of your floor space be residential.

What you get?

You get a policy covering the condominium with limits up to the building value or $250,000 per unit or whichever is less.

Ask your agent for more details.

Zurich offer of Excess Flood insurance

Zurich announces it will offer Excess Flood Insurance

Last May Zurich announced that it would fill the gap on flood insurance. Condominiums face a huge problem in that the only place to turn often is the NFIP ( the national flood insurer).

The problem is that they will only cover up to $250,000. More if they consider cover for each unit owner @ $250,000.

There are not enough insurers that cover excess of the NFIP.

Companies and programs for flood have popped up and gone away as fast as they have started. One major claim, or a restrictive reinsurance market, and the opportunity for coverage is gone.

The industry needs more insurers to step up and fill the coverage gap for flood.

Wind and Hail exposed condominiums

Top 10 states exposed to wind and hail claims:

  1. Texas
  2. Illinois
  3. New York
  4. Ohio
  5. Missouri
  6. Tennessee
  7. Indiana
  8. Kentucky
  9. New Jersey
  10. Colorado

Might not be what you think. Where are the New England states? Where is Florida and California? These are the areas of great concern to the insurance modeling agencies and where insurers put on mandatory wind deductibles?

hail damage


should you reveal names of delinquent unit owners?

This subject of revealing names of delinquent unit owners in a condominium association was brought up in a forum on linked In.

The group discussion was in Condo HOA Law & Living.

From an insurance standpoint, this might cause issues. You may be liable for slander or libel. You could wrongfully list someone and cause anguish. You could aggravate someone into physical retaliation.

This action may also be illegal, and hence you would not be covered.

The consensus from the experts was to not list the dead beats, and to check your state laws and your condo documents.

Good luck, and remember to always keep up to date with your fees and there won’t be a problem.