Tag Archive for liability

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


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.


Does a condominium need auto insurance?

Does your condominium association need automobile insurance?

If you have an auto that is owned by the association, then the answer is YES!

But what if there is no owned auto? What then?

You still have automobile exposures. What if you rent an automobile on association business, or you hire a car. what if a trustee or employee of the association uses their car on condominium business and injures somebody?

Then you do need auto coverage. It is called hire and non-owned automobile liability. It will cover you in case of one of these events ( subject to policy conditions). The cost is cheap and worth having.

Let’s talk about your garage where you park cars. Are you responsible? Are they in your care and control. Do you valet?

Most auto exposures. If this is the case, then you need what insurance calls ” garagekeepers liability”

Ask your agent or company about these important liability issues.

Condominium water heaters

What is the most frequently reported loss in a condominium? The answer will vary, but for my money, it is water heaters.

Water heaters only last so long. They are made to break and wear out, just like a tire on your car. It either wears out and you replace it before it blows or goes flat like a tire, or you wait for the blow out that never happens at a good time.

Approximately 5 to 7 million water heaters leak each year. That’s a big number.

condo claimsWhat happens when it breaks? The water heater is filled with hot water lots of it, more than enough to fill your tub for sure, so when this goes, the water goes everywhere and floods the area all around the heater. If this is in a basement, the water will do less damage. But if you own a unit on the fifth floor, then it goes out then down, affecting not only your unit, but all the units below you.

Who is responsible for the damage? I wish I had a nickel for every time someone asked me this question.

Responsibility can be defined by the association by-laws, or whether or not you were negligent. If you knew of the defect, or were aware of the possibility of rupture, then you may be responsible for the damage to the property of others and the condominium. If for example, you have a newer unit with a longer shelf life and a pipe breaks in the wall, then you are probably not responsible and the other affected unit owners will have to fix their own damage.

This is much like if a neighbors tree falls on your property in a windstorm, it is your problem not theirs, unless they were aware of a defect or were on notice that the tree needed removal before it fell.

What can you do?

  1. Have a program in place to replace the water heaters at a designated time, before they break. My association does this and there are no problems.
  2. Buy the best one out there. Water heaters come with different periods of expected use. They are printed on the side
  3. use a tankless system
  4. Have pans placed under the water heaters with drains.
  5. review your by laws and make sure everyone knows their responsibility.
  6. Send newsletters and ask people to inspect and replace their heaters if necessary.

Accidents happen, but many of them can be avoided with proper loss control.

5 unique condo insurance risks

top-5-condominium-questionsStandard condominium policies have standard coverages and standard exclusions.

Not all condo’s are standard, and not policies cover the unique insurance coverages you may need.

Some unique coverages that you may not find on your policy.


Top 5 unique insurance coverages:

  1. Liability for functions such as Liquor, security, and workers compensation for uninsured contractors
  2. Watercraft and marine liability. some condos have water and marina exposures.
  3. Automobile liability- even if the association does not have an auto, it has an exposure. see Hired and non owned auto liability.
  4. contingent business interruption. You may have loss of income coverage for loss due to direct damage, but what happens if the loss is related to an off premises loss.
  5. cyber security- You keep a lot of very valuable and private information. If that security is breached? Do you have coverage?

There are lots of things to think about before you finalize your policy. Tell your insurer about all the things that worry you.

What is D&O Coverage? Condominium Association

What is D&O coverage and do you need it on your master condo policy? 

Directors & Officers coverage is not mandatory, unless required under the bylaws, but foregoing this coverage may not be a wise decision.  Regardless of the size of your condominium association, if you have people volunteering their time on your board, you have exposure that your general liability insurance may not cover.

Working on your condo’s board without D&O is like flying on a trapeze without a net, or walking around with your wallet hanging outof your pants. You are bound to get hurt or lose your money.

Your homeowners policy DOES NOT cover you for this exposure.

The directors and officers on your condo association board make many important decisions throughout the year that effect your living situation.  They use their best judgment in determining how to spend the reserve fund for things like repairs and maintenance.  They also maintain and communicate the rules and regulations of the complex.  If one of these decisions results in a lawsuit against the board or an individual in the organization, you will want to have insurance.


Standard general liability insurance policies only cover claims for bodily injury or property damage.  D&O covers mismanagement of association affairs, failure to maintain adequate reserves and records, and failure to enforce rules and regulations.


Things to review in your D&O policy:


Who is insured?                                           

Make sure that everyone handling decisions is covered on your policy.  This may include: the association, past and present directors, trustees, officers, volunteers, committee members employees , property managers and The developer.


How much coverage do you have?  

Defense costs are often limited to the policy limits so make sure you have enough coverage.


Are there any exclusions in coverage? 

It’s important to know that your D&O insurance may not cover decisions made regarding the association’s insurance policy, contractual and developer liabilities, discrimination and civil rights, or claims may by one board member against another board member.


Condominium Insurance Basics

Insurance can be daunting even for the professionals. A condominium insurance policy is a contract between the condo and the insurer. It is long and legal looking and ambiguous at best. Find a good agent who specializes in condominium insurance and review all of your exposures and watch and understand these five basic coverages:

  1. Property insurance
  2. Liability insurance
  3. crime insurance
  4. professional insurance
  5. worker/vendor/employee insurance

If you have a working knowledge of these basic coverages, You should be able to make the right decisions for yourself and your condominium association.