Insurance news and information

As summer approaches and residents head outdoors, apartment and condo associations should be ramping up their maintenance and keeping a more vigilant eye on property conditions. More than just conditions around pools and tennis courts, association properties are riddled with potential problem areas that could create physical hazards as well as financial ones for the association coffers.

The more common areas of concern are those pools, tennis courts, walkways, and parking areas. But associations should look deeper into the property and locate maintenance issues before they become large setbacks.  Read more…

Suppose you’re a new apartment association board member. Part of your duties is to oversee some of the accounting recordkeeping. But as you’re looking over the accounts, you notice mention of payments to a repair company. You call the number – not in service. You check the address – no known case of that company ever having operations there. Yet as early as a month ago, there was a payment to that company for services rendered.

Call it cooking the books, fudging the numbers, whatever you like. Your association board is looking at a potential case of fraud. One or more of your board members may be skimming funds and manipulating the accounts in order to do so.

Read more…

Donald is a board member who owns a snow removal and landscaping business. Jan is a board member as well as the owner of an insurance agency. Every year for the past ten years the board has voted unanimously to hire Donald’s company for their landscaping and snow removal. They buy their apartment association insurance policy from Jan. And both instances could be violating the terms of the association bylaws or worse, state laws.

That’s because associations are often required if not expected to keep an arm’s-length distance between their personal businesses and that of the association. If the bylaws state that the association will entertain bids for the various services, it is in their best interests to prohibit board members from submitting bids themselves. It smacks of nepotism and can set your board up for an unsightly lawsuit, one that could be waged against the association board as a whole, as well as individual members. If you’re not insured for directors and officers risks, a lawsuit could drain both association coffers and your own bank account.  Read more…

Suppose your resident is behind in his payments to your condo association. Now suppose he has someone renting his unit. Should you as a condo association approach the renter and attempt to collect the owner’s rent instead of waiting for the delinquent resident to pay up? Can you?

Likely not. Your agreement is not with the person renting the apartment or condo. Your written agreement was signed by the resident in question. The renter has no idea usually that the resident isn’t paying his bills, nor does the renter have control over the resident’s actions. Also, renters pay maintenance fees as part of their rent payment to the owner. It’s the owner’s responsibility to forward those payments to the association, not the renter’s. Neither the association’s agreement with the owner nor the agreement between the renter and owner is set up to force a renter to pay an owner’s expenses, nor should they. Read more…

Too often I’m faced with condo associations that make a critical mistake when insuring their properties – they simply renew without looking. It’s critical because in many cases, policies are renewed year after year without regard to changing property values, changing conditions, aging equipment and facilities, or changing occupancy levels.

And in today’s uncertain real estate market, those criteria could mean you’re either underinsured and assuming more risk than you need to or you’re paying for too much coverage. Let’s look at it from an underinsured perspective. Suppose your association purchased a new policy five years ago. At that time, the property consisted of three buildings, a pool, and six acres with a paved walking trail. The property value then was $1.2 million. Read more…