Tag Archive for crime

FHA Guidelines for Condominium Insurance

It is estimated that 30-40% of all condominium loans now are backed by the FHA. It is very important that your condominium association seek and get approval.

Loans are easier to come by, and rates are better, and the loan is backed by the federal government.

Good deals come with strings attached. The association has to meet many criteria to be approved.

We will deal with the insurance section, and what is required.

You are required to meet the following criteria:

  1. 100% replacement cost- The association must carry enough insurance to completely rebuild the structure back to it’s original design, layout and appearance at the time of loss ( no¬†unit owner “gap” insurance is eligible).
  2. General liability insurance- at least $1,000,000 per occurance
  3. Crime coverage- Fidelity or employee dishonesty coverage covering the association and including naming the property manager as additional insured. ( FHA backs down ) This is for associations with 20 or more units. The amount of coverage to be equal to 3 months assoc. fees and total amount of the reserve funds.
  4. Certain Flood Zones are not eligible.
  5. Unit owners must carry 20% of the value of their unit as coverage “A” building coverage on their unit owners homeowners ( HO_6) insurance.

Getting FHA approval is no small feat, but it has it’s benefits. Insurance is only a part of the process, but if you comply with these five steps, you should be on your way to approval.

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.

stories:

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.