Tag Archive for insurance

how do condominiums affect the economy?

Cold hard facts:

  • In 2012, association boards supervised the collection of close to $40 billion in annual assessments and maintained investment accounts of more than $35 billion for the long-term maintenance and replacement of commonly held property.

Condominiums matter and pump billions into the economy every year in sales, maintenance and fees.

I have no idea how much money is spent on condominium insurance. But let’s make a guess. I guess that $1000 is spent for insurance on average by every unit owner. This is based on their own personal insurance, and the proportionate share of the master policy.

With 1.25 million units, that is over 1 Billion dollars.

Just a guess, but that is a bunch of zero’s.

Condo unit owners matter.

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.

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.

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.

How many condo’s associations in the US

Quick facts about condominium associations.

The last data source as of 2007 showed that there were over 120,000 condo associations in the United states.

Figures also show that There are almost 10,000,000 condominium users.

If you are a condo owner, you are not alone. It also points to the fact that insurers should be paying close attention to this valuable,sizable and profitable market.

 

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.

 

condominium insurance explained zoning laws

But only part of the building was damaged!

How does a $20,000 property claim cost $100,000 to repair?

Zoning Laws continually change and can vary greatly from town to town.  Did you know that in some areas, if 25% of the building is damaged by a fire, the ENTIRE building must be brought up to code?   New codes can require the installation of hardwire smoke detectors, and sprinklers.  Not to mention updated electrical wiring, plumbing, wider doors or hall ways, handicap ramps, emergency lighting, etc…

 

But you have property insurance right?  Property Insurance has a simple purpose: to make you whole.  The insurance company can provide funds for a covered loss to build the structure back to what it was prior to the loss.  If the building had four walls and a roof, the insurance company will pay for four walls and a roof.  But the coverage is limited to rebuild what you had.   Imagine the town told you had to bring the WHOLE building up to code, even the units/areas/floors that were not affected by the loss.

 

SnowCollapseWhere does the money come from to bring the building up to new the codes?   You would need to look to the Law & Ordinance Coverage within the property section of the policy.   One of the components of Law & Ordinance coverage is “Increased Cost of Construction”.   Consultant with your insurance broker about your policy’s current limit, and then inquire what the cost would be to increase.  You will ask yourself or your broker “what is the right limit”.  This is an excellent question and not one easily answerable by someone that is not a contractor.  Even contractors have a difficult time as the codes, rules, and regulations vary by town and are constantly being updated.   One thing is sure, if the current policy only provides a built in limit of $10,000 or $25,000 then you should look into increasing the limit.

 

Guest blog by:

David Haynes

Deland Gibson Insurance

If you are looking for a condominium insurance expert in Massachusetts

contact:

dhaynes@delandgibson.com

 

 

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.

 

Mold kills dog

If you have not gone anywhere lately, because you thought you might miss Ed McMahon coming to your door with a giant check from publishers clearing house.

Then Go out! Ed is not coming, he has bigger issues. Ed claims that mold killed his dog and that the insurance company is to blame.

Read more here in an article by David Alpert of ABC News.

Mold is a serious problem, and left unabated, or unchecked, it can kill you or your pet. Whether or not it was the insurance companies fault is up to the courts to decide, but poor ED has to live in a temporary shelter for $23,000 a month.

Ed-McMahon