Tag Archive for reserves

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 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.