Condo Media - February 2019 - 18

Homeowner's Corner

Association
Insurance
A Homeowner's Primer
Insurance agents, like doctors, have
a broad range of specialties and
areas of expertise. Fortunately, community association insurance is one of
them. Community associations have
unique needs and exposures, so associations should be diligent in selecting an
agent with experience in this area.
Association insurance agents can serve
the association and the board in several
areas including:
n Reviewing the association's documents, recommending the minimum
insurance requirement, and recommending additional coverage that
might be appropriate.
n Inspecting the community and
identifying exposure that needs
to be addressed.
n Verifying the property values for replacement and/or reproduction costs.
n Reviewing the association's fidelity
bond, and ensuring that all appropriate parties are included.
n Obtaining premium quotations
and helping the board select the
best program.
n Educating board members about coverage, exclusions, and limitations.
n Educating residents about the association's policy, where it stops,
and where the residents' and
owners' responsibilities begin.
n Offering unit owners special coverage
and possibly reduced rates.
n Providing certificates of insurance
or evidence of coverage to lenders.
n Helping the board decide how claims
and deductibles will be processed.
n Assisting with creating a claims
procedure manual.

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CONDOMEDIA February 2019

n Customizing a riskmanagement program.
n Helping the association establish
procedures for service providers.
n Reviewing the association's claims
annually and recommending how
to reduce future claims.
COMMUNITY INSURANCE
Some of the condominium monthly
assessment goes towards paying for
the community's insurance needs.
Have you ever wondered what kinds
of insurance community associations
need? While not an exhaustive list
of insurance considerations and options, below are some of the different
types of insurance typically available
to associations.
l Property insurance. Most other
types of coverage are built around
property insurance. It covers all
buildings, structures, and personal
property owned by the association.

l Directors' and Officers' liability.
Boards are volunteers trying to serve
their communities, but even when
boards behave appropriately and
use sound judgment, someone may
still file a lawsuit claiming wrongful
termination, sexual harassment,
discrimination, or mismanagement
of funds to name a few common suits.
l Umbrella liability. This type of
coverage closes some of the gaps in
other types of insurance policies.
No standard umbrella policy exists,
and the association should work
closely with its insurance professional to design a policy tailored
to its specific needs.
l Workers' compensation. This
insurance-required in most states-
provides benefits for employees who
sustain injuries while working for
the association.

l General liability. In addition to
protecting physical property, the
association has commercial liability
insurance. Unlike property damage,
which often can be measured in
dollar amounts, liability claims
have no limits other than those
imposed by courts.

l Terrorism. Insurance companies
are now required by law to offer
coverage for certified acts of terrorism. An "act of terrorism" is usually
defined as any violent act that is
dangerous to life or property with
the intention of affecting the population's conduct, with damage totaling
at least $5 million.

l Auto (owned, non-owned, and
hired). Associations with employees/volunteers who drive cars,
trucks, or maintenance vehicles on
association property or elsewhere
while carrying out association business need auto insurance.

l Mold. Damage from mold is excluded from most standard property
insurance policies, which tend to
provide coverage for damages that
are sudden and accidental but don't
generally cover the cost of cleaning
and maintaining a home.
Condo Media - February 2019

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