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. 

Five areas to consider:

Foliage. It’s not just the trimming and care of your property landscape that should concern you, but also the types of plants and trees. Some species are prone to disease. That can create epidemics of insects and infestations that can kill off much of your expensive landscape plants. Check for white fly infestations, which can spread to all plants and destroy pricey shrubs. Also, learn what types of trees are on the property and what diseases are currently attacking them. For example, ash trees are experiencing an emerald wood borer outbreak that’s deadly to the tree. A dead tree is a hazard to buildings and people. Remove any trees for which you cannot take preventative measures.

Energy use. It doesn’t hurt to get an energy audit to understand where your association and resident units are losing precious energy. Call in your local utility companies to inspect the property and make recommendations that could save thousands.

Foreclosures. Sure, it’s not up to the association to take care of units not belonging to them. But to protect the overall value of the property, consider doing basic maintenance and lawn care in and around vacant units.

Periodic maintenance. Most associations create a schedule of regular maintenance, but if you see something broken or rotted now, replace it. It could halt further, more costly damage or injury.

Animal damage. Nooks and holes in building facades are great hiding and nesting places for birds and animals. Make sure to eliminate any unwanted residents by repairing holes and closing off areas where squirrels and birds could nest.

Photo credit: j-ster

 That’s because some homeowners require the use of service animals. Seeing-eye dogs are the obvious exception to your board’s rules. And the exception should be made, because to deny a disabled person the right to animal assistance is in direct violation of federal and state disability legislation. But some pet owners are going to great lengths to claim disabilities in order to keep pets that wouldn’t otherwise fall under the definition of a service animal.  What about a service monkey to assist the disabled, or a guide horse for the blind?   It’s an area of the law that lacks clear definition, and while the Department of Justice has a proposal pending that would exclude exotic animals (such as snakes or other wild animals, there’s no clear legal precedent to follow.

 So how do you as a board, decide who in your community is in need of a service animal and who isn’t; what type of animal is considered a service animal and what isn’t. And more importantly, can you legally make those decisions? While your community association may not be comfortable defining what constitutes a service animal, you may be able to put parameters on that animal’s interaction with the rest of your community. For example, if a resident claims that he needs his pet raccoon to reduce his stress levels, your board could require that the animal not come within say 500 feet of another resident.

 Community associations should consult with a legal expert to address the issue of service animals. Find out if your state allows for your board to require proof of disability, as well. Check also with your insurance broker to understand what policy requirements you must meet in order to maintain proper coverage.

Has this been an issue for your association?  How did your board handle it?  Do you agree or disagree with their decision?

 Photo credit: The Guide Horse Foundation

 1) Bare Walls In – policies covering all real property from the exterior framing inward, excluding fixtures or other installations within the unit.

 2) All In – policies covering all fixtures, installations, or additions within the interior surfaces of the individual units.

 Obviously the best one for your unit owners would be the All In condo association insurance policy, which would limit the need for owners to purchase additional coverage. Condo associations buying Bare Walls In coverage leave a bit more loss exposure for their unit owners. Most condo associations will advise unit owners on which policy is covering the premises. But what about deductibles?

 Most condo association insurance policies have a deductible. As condo associations reassess their insurance limits and premiums and increase their deductible amounts, many unit owners are left exposed to large loss amounts. Why? Because condo associations can, and do, pass the deductible on to the unit owners.

 In the past, deductibles topped out at $5,000. With historic losses in the insurance industry, many policies became hard to obtain, had lower limits, had higher deductibles, or simply cost too much to continue at the current level of coverage. These days it’s not uncommon to see a condo association with a deductible of $25,000 or even $50,000. If the damage to the building is spread among 25 residents, the deductible is much easier to afford than if the damage is limited to one or two units.

 If your condo association has opted for higher deductibles, inform your unit owners in writing of their exposure. Unit owners can purchase their own property policies to cover any losses not handled by the condo association policy, thus reducing the amount they’re responsible for should disaster strike. Paying  $25,000 – $50,000 to cover the association’s deductible isn’t in everyone’s budget. Unit owners who currently have property policies should confirm with their personal agent that their policy would cover the deductible in the event of damage. 

Flickr photo credit: doyoubleedlikeme

 Yet some condo associations are finding the first right of refusal arrangement, that which allows the condo association board the opportunity to either buy or refuse to buy any unit up for sale, a godsend in a mighty tough market. One condo association in Chicago has developed a plan to become its building’s landlord, offering to buy up vacant units under the first right of refusal clause, rent them out, and resell them after the market conditions improve.

 Another reason condo associations are resurrecting what was once considered a discriminatory practice – to ensure the new owners can afford the condo unit. With more foreclosures in the market than at any time in recent history, condo associations are eager to curb the loss of association fees and residents by hand selecting the next wave of residents.

 A number of states have prohibited the first right of refusal action. New Jersey passed the New Jersey Condominium Act, which expressly prohibits the practice. Still, many condo associations do have this provision in their bylaws, though it isn’t often exercised due to the risk of discrimination claims.

 Should your condo association use first right of refusal to ride out a tough economy? Talk with your insurance broker. Understand what your state’s laws are, and determine if the benefits of purchasing units and becoming a landlord outweighs the risks. It’s a drastic change from the original function of a condo association, but if foreclosures are plaguing your property, it may be a viable alternative.

Flickr photo credit: allaboutgeorge

Flickr photo credit: everdred

[technorati tag afeuck6w4j] With hurricane season in full swing and hurricanes now kicking up throughout the Atlantic, condo associations might want to review and update emergency plans before facing a possible evacuation or shelter situation. If your property is located within a hurricane, tornado, or flood zone, it would be wise to review and reiterate to their residents what emergency plans are in place and what residents can expect during an emergency.

Prepare a list of actions for your residents to take in the event of an emergency. Some of the necessary information includes: 

• Updated residency status/contact information throughout the year. For instance, if your residents typically travel for work, encourage them to let someone in the office know of their whereabouts in case of an emergency. 
• Utility contact information. Residents should be instructed to turn off gas utilities and to secure any outdoor furniture, grills, etc. Also instruct residents not to light matches or use gas appliances during a storm. A leak could be undetected and could result in injury or death. 
• Any keys to cars or units should it be necessary to move a car out of harm’s way or enter the property for safety reasons. – Emergency supplies needed. 
• Copies of important documents. 
• Ample food and medicine for at least 5 days. Also, plan on 1 gallon of water per person per day.
• Evacuation plans, including reiterating that those choosing to stay behind when ordered to evacuate will not be rescued until it is safe to return to the property. 
• Agency contact information for those with special needs. 
• Pet preparedness, including medicines and evacuation plans.
• Safety precautions during the storm and after. 
• A list of emergency evacuation shelters. 
• A list of condo unit areas that homeowners are directly responsible for. 
• A reminder that some homeowner policies include coverage to stay elsewhere during renovation to a damaged home.

Check with your insurance broker to determine what your responsibilities are to your residents during an emergency event. Ask the following questions: 

• What information must I provide to residents? 
• How often do I need to inform them of emergency plans and other information? 
• Is our condo association required to force an evacuation prior to a hurricane or other natural disaster? 
• Can our condo association designate one area of our property as a shelter area during emergencies?

If you have questions, talk with your condo association insurance broker. Preparing for disaster long before it happens can save you money and save lives.

Flickr photo credit: turbojoe_(away)

If you’re watching your condo association insurance costs these days, you’ve seen the trend. Insurers are passing on higher and higher deductibles to associations – sometimes to the tune of $10,000. And associations are having difficulty adjusting to the higher costs. In fact, associations facing mounting deductibles are often looking for places to transfer that cost. That means some unit owners are now coughing up extra for the additional deductible amounts in the form of higher association fees.

It stands to reason that associations would choose to pass the additional cost on to the owners. Most associations now include insurance costs in association fees. Because much of the liability stems from owner activity, associations feel justified in including the deductible charges in association fees. But some associations are considering passing that cost on only to those owners who receive the insurance benefits paid for by the premiums. While that’s a more just way of handling the situation, it’s unlikely that a smaller group of owners would be able to take on the deductible. Also, the association may have to go through the expensive legal process of assigning negligence to the owners, which may not be successful.

The best solution is to spread the cost among all unit owners. Also, it’s good practice to help your owners understand your basic insurance coverage, what actions or inactions on their part affect rates, and how that affects their costs through higher association fees.

However, not all policies allow condo associations to pass deductibles on to their resident owners. Some grandfathered policies stipulate that condo associations are responsible for both premiums and deductibles. Check the policy language, and also go over your association’s Declarations to determine if passing such costs onto owners is possible. If not, talk with your insurer and see if changes can be made to your Declarations section in order to reduce the condo association’s financial liability.

Flickr Photo Credit: MeijerGardens

It takes just a cursory glance at the news to realize that many organizations have been victims of crime perpetrated by their employees or board members. Tales of treasurers absconding with funds, board members accused of bid rigging, or groundskeepers pilfering equipment abound. There are also numerous incidents of residents, property visitors, or neighbors causing damage or stealing property. There’s no excuse – condo and homeowner associations need crime coverage.

While typically associations purchase fidelity bonds – coverage that responds to employee embezzlement, forgery, or theft – this coverage does not respond to the acts of outsiders not covered specifically under the bond. Also not covered is theft of a client’s property while in the association’s “care, custody, or control.” So if association fees paid are stolen by an outsider from the company vault, fidelity bonds will not respond.

However, most insurers offer optional insurance to cover crimes not covered on fidelity policies. They include:

• Computer fraud
• Extortion
• Forgery/alteration
• Client property liability
• Robbery/burglary
• Theft, disappearance, and destruction

Even with such coverage, policies often limit the amount of loss covered. For example, if a visitor to the property is stealing cars over a 2-year period, some policies will cover the acts, but possibly only to the limits on the current policy. In other words, if the theft amounts to a total of $2,000,000 and the policy limit for the current year is $1,000,000, the insurer may only pay up to the $1,000,000 limit. The previous year’s losses may have to be absorbed by the association. The same holds true for acts committed under a fidelity bond.

Do you know if your association is covered?  Let’s talk and find out what limits exist on your current coverage.

Flickr photo credit: michel_langendijk

Forming your condo association is a system. You set up the board, the office, and you purchase general liability/property coverage and you are ready for business, right? Wrong.

What most condo association clients don’t recognize is that the general liability policy does not cover every risk.

In fact, general liability covers the bare minimum of risks that could befall a business.

So how do you know whether the condo association coverage you have is adequate? First, look at the declarations page of your policy. What kinds of coverages are listed? Note also how those coverages answer your specific needs. For instance, your general liability policy may cover damage or theft, but does it cover accident or injury caused by employee negligence? Does that policy cover wrongdoing of a board member or members that cause residents or employees monetary or physical loss? If your accounting clerk commits fraud, will it be covered?

In short, probably not. Most general liability policies cover claims involving damage or injury caused by the insured during normal performance of the business. If you have purchased a condo association insurance policy, you have coverage for the buildings, commonly owned property, and liability covering the association. Any additional coverage is an added-on coverage option, and will be listed either on your addendum pages or sold as a stand-alone policy or policies.

So what should you have? Typical risks associated with condo association operations include:

- Property claims
- Liability claims
- Board member actions
- Employee actions
- Retirement issues
- Workers compensation
- Cyber liability
- Contractor liability for any remodels
- Floods, earthquakes, equipment breakdowns

While the general liability policy typically will cover property and liability claims, the rest of the risks are excluded, depending on your policy. However, associations are able to purchase supplemental coverage to lessen the exposures that these risks produce. Directors and officers coverage can diminish board-related risks, employee practices liability can address acts of your employees, and other policies can help to reduce your association’s risks for a reasonable price.

If you need a free review of your current coverage, call Emerson Poort at 877-201-3113 or click here to send an email. Emerson specializes in condo association coverage and can help put together a comprehensive package that fits your association’s needs.

Understanding your policy and gaps in your current coverage is the first step to preventing unnecessary, costly losses. Read through your policy today and call Emerson with any questions.

Flickr photo credit: beancounter

Ten Business Insurance Renewal Reminders – “Let Us Know”

To insure a Home Owner or Condo Association is to worry – if you’re worried about whether or not something may need to be covered, let us know.

1.  Read your policies, paying attention to the limits, conditions, and exclusions. If you have questions or concerns, let us know.

2.  Liability limits can be increased – if you’re concerned, let us know.

3.  Commercial General Liability (even with an Umbrella) doesn’t cover all types of claims. If you’d like to discuss Employment Practices Liability, Directors & Officers Liability, Fiduciary (ERISA) Liability, Professional Liability, International Liability, Cyber-Liability or other types of protection, let us know.

4.  Selecting adequate Property insurance limits is your responsibility – if you underinsure, there can be coinsurance penalties and/or you’ll come up short after a serious loss. Replacement Cost requirements have nothing to do with Market Value or Book Value – what would your building(s) and contents cost to replace, brand new, if destroyed?

5.  Studies show that even with adequate limits on buildings and contents, businesses that don’t have enough “Business Income Insurance” fail within three years almost 50% of the time. If you’re concerned, let us know.

6.  We need to be told when or before there are changes to your business operations, locations, products handled or services delivered.

7.  With few exceptions, Workers Compensation is required by law for all businesses. If you don’t have it insured somewhere, let us know.

8.  Property insurance policies don’t cover all perils. If you’re concerned (for example) about Flood, Earthquake, or Equipment Breakdown, let us know.

9.  Do you have any (or enough) Crime insurance? If you’re not sure, let us know.

10. Do any of your business contracts contain insurance requirements? If so, let us know.

Photo courtesy of flickr - Last NYC Hero

Homeowner associations are under constant pressure to keep costs down.  With the natural disasters that have occurred in the past year or so, the pressure is growing as insurance costs increase and are easily the largest expense in the budget. 

Many Condominium and other community associations have considered self-insurance as an option.  Self-insurance can reduce an associations’ premium by 20-40%.  As good as that sounds, self-insurance should be fully investigated before jumping in.

What is self-insurance? 
In a very loose interpretation, self-insurance is a typical property/casualty policy with an extremely high deductible in which the association is responsible for paying claims less than the deductible.  State regulations to self insure Condominium, Cooperatives, Homeowners’, and Timeshare associations vary and must be carefully reviewed for your particular state and circumstance.  

Those in favor of self-insurance feel that in their particular case the possiblility of a major catastrophe affecting all members of the plan is so remote and unlikely that the benefits outweigh the risks. 

Those against self-insurance think that should a catastrophic event occur they would be financially unable to pay the claims in the instance of full replacement coverage.

If you think self-insurance is something to look into, contact an independent agent with access to multiple markets who specializes in insurance for community associations.