Condo Media - September 2016 - 50

The Region

VERMONT

Snow Cover
You Can't Control the
Weather, but You Can
Buy Insurance for It
[by Nena Groskind]

Condominium associations understand the importance of insuring
against fire, floods, theft, and liability of all kinds. They may also want
to consider insuring against snow-or
at least against the unexpected cost of
removing it.
You won't find many associations, if
any, that predicted the record snowfall
that buried part of New England under
more than 100 inches of snow two years
ago, or that budgeted adequately for the
cost of removing it. The resulting shortfalls forced many to levy special assessments on owners, obtain bank loans, or
both. Snow insurance-also known as
"cost containment" insurance-would
have helped.
Robert Holmes, whose company
(Spectrum Weather Insurance) provides the coverage, explains it this way.
Unlike a typical insurance policy, which
is based on the estimated value of a
covered loss, snow insurance is based
on an index that assigns a value to the
amount of snow that falls. "The policy
will pay for every inch over the threshold amount the client selects."
NO HAGGLING NEEDED
The threshold is like a deductible,
Holmes explains. If your threshold is 30
inches, you will pay removal costs for
the first 30 inches of snow; the insurance will cover costs for any snowfall
above that, up to the policy limit.
Because this is an agreed or stated value
policy, there is no haggling about the
value of the loss and no need to examine
the association's books to determine
how much it actually paid in snow removal fees. The coverage is based on the

CONDOMEDIA

amount of snowfall. "That makes claims
quick and streamlined," Holmes says.
Snow coverage isn't a new concept;
it's been available for years, introduced
originally for snow resorts, and once
used almost exclusively by them to protect their earnings against insufficient
snow. Snowmaking machines have
made the coverage unnecessary.
Although the appeal for condominium associations is obvious, few
purchase the coverage. "Most probably
don't know it's available," Holmes
observes. Those that inquire about the
insurance are concerned primarily
about the cost. As a rule of thumb, the
premium will be between 5 percent
and 15 percent of the policy limit. On
a $100,000 policy, the cost could be
anywhere from $5,000 to $15,000.

SETTING THE THRESHOLD
"Pricing obviously doesn't tell you a
lot," Holmes says, because the actual
premium cost for any association will
depend on the coverage threshold it
selects. The higher the threshold-the
further it is from the area's average
snowfall-the lower the premium will
be. The closer the threshold is to the
average, the more you're going to pay
for the coverage.
"You don't want to insure the average," he explains. "You want to insure
the extremes." He uses this example
to illustrate: The average annual
snowfall is 24 feet; the association
could cover 30 feet from its operating
funds, and could tap an emergency
"rainy day" fund, if necessary, to
cover another 10 feet. This associa-

Condo Media - September 2016

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