Property insurance provides protection for the association for a loss or damage to the real and personal property of the association. Association can purchase property coverage for the community structure such as the residential buildings, clubhouse, and gazebo etc…The association can also purchase coverage for the personal property of the association.
General Liability coverage protects the association against third party property damage, bodily injury or personal injury due to negligence. This coverage is very important and the most common type of claim you may see is with regards to an individual slipping and falling on the insured property. This coverage does not provide any liability coverage for the inside of the units. General Liability insurance can be extended to cover the association board meeting that may be held offsite at a local hall or library.
Umbrella liability insurance closes the gap between underlying limits of coverage and possible claims in excess of that coverage. In recent years, it has become common for businesses, associations, and individuals to purchase this type of coverage. Due to the high costs of litigation and medical care we recommend that you purchase an umbrella policy. Coverage can be purchased up to $200,000,000. An adequate amount of liability coverage is the only way to protect your association from a catastrophic legal judgment or settlement.
Directors & Officers Liability:
Every director and officer of a homeowner or condominium association board has personal responsibility to the association. The basic purpose of Directors and Officers insurance is to protect directors and officers from claims made because of wrongful (or allegedly wrongful) acts or omissions made while acting in their individual or collective capacity on behalf of the homeowners association. Typical claims include wrongful termination, discrimination, and mismanagement of common funds. Coverage can be added to include the property manager if applicable. Coverage varies between D&O carriers. Several options are available. We will be happy to provide you an outline of the various carriers and a summary of the coverage they provide.
Employee Dishonesty & Fidelity:
This coverage “indemnifies” the association for loss of money, securities, or any property from theft, embezzlement or willful misapplication or misappropriation, or any other criminal act by employees or directors & officers. As an option, coverage can also be extended to protect the association against criminal acts by a property manager. We strongly recommend a minimum amount of insurance equal to the sum of:
- Three months of fees and charges
- Plus your capital reserve fund
Commercial automobile policies provide liability coverage as well as physical damage coverage for the association owned vehicles. The association can purchase “other than collision”, collision, towing and labor and rental reimbursement coverage for their vehicles. Coverage can also be purchased for hired and non-owned liability.
Workers’ Compensation provides coverage for injuries to association employees that occur on the job. Typically, Workers Compensation will pay for medical benefits for job-related injury, disability income including lost wages and rehabilitation benefits. You are legally required to provide Workers Compensation Insurance if you have any employee’s. Employers Liability insurance, which is part of the same policy, covers you under certain circumstances related to employee injuries and illnesses, which are not addressed by the statute.
Equipment breakdown coverage provides coverage for mechanical, electrical or pressure system breakdowns. Many carriers include this coverage on their package policy, however if your policy does not include this coverage, we recommend you call to discuss the need to add it. If you have a pool, well pumps, generators or boilers, you have a greater need for this valuable coverage. If your local government requires annual boiler inspections, the inspection included in some equipment breakdown insurance policies may fulfill those requirements, so check your insurance policy and local buildings department or similar agency.
Employment Practices Liability Insurance (EPLI)
Employment Practices Liability Insurance or EPLI, protects the association for wrongful termination, sexual harassment, age discrimination, and other discrimination charges. EPLI lawsuits may often stem from hiring, dismissal, failure to promote direct employees and subcontractor’s employees.
In the northeast, earthquakes occur several times a year. Every four years, one of them does damage which would be covered by earthquake insurance. Your policy does not cover earthquake damage unless this coverage is added by endorsement or you purchase a separate policy.
Flood is automatically excluded on all policies unless added by endorsement and charged an additional premium or by purchasing flood coverage through the National Flood Insurance Program. If you purchase this coverage, you are covered for damage by:
-Surface water including flood, waves, tides, tidal waves, overflow of any body of water, or its spray – all whether or not driven by the wind.
If you are in a flood zone A, B or V, mortgagees will require proof of flood insurance. In any other zone, flood insurance is available but not mandatory by mortgage companies. We do however recommend purchasing this coverage.
Building Ordinance or Law (Building Code Upgrades)
Most commercial property forms either exclude or limit the amount paid for loss or damage caused by enforcement of any ordinance or law. This endorsement covers a building in the event that the enforcement of any building, zoning, or land use law results in loss or damage, any increases cost of repairs or reconstruction, or demolition and removal cost.
What are Certificates of Insurance and what do they mean to your Association?
Certificates of insurance, which should be collected from each and every vendor that comes on to an associations property, is a representation of who the named insured is, the effective dates, types and limits of coverage as well as the names of the insurance company’s that have issued the policies.
Additionally, a certificate of insurance will spell out the description of operations, locations, vehicles, exclusions added by endorsement as well as any special provisions.
It is important to note that a certificate of insurance is issued as a matter of information only and confers no rights upon the certificate holder UNLESS the certificate holder specifically requests additional named insured status in which case the certificate holder would be afforded those same rights. Ideally, it is in the Associations best interest to obtain additional named insured status whenever possible to afford you those same protections.
Keep in mind that information contained on a certificate of insurance is a “snapshot in time” which may or may not be in force at the time of a loss.
Why is it important that Associations collect and maintain certificates of insurance?
It is important that certificates are collected from each vendor to protect the interest of the Association in the event of a claim. This way, the association knows what coverage’s are in place and who to contact should anything ever develop.
Additionally, for Associations that carry workers compensation insurance, it is vital that they maintain records of these certificates to avoid being a surcharged at audit for exposures that were not covered by the vendors.
For any questions or additional information;