By Tony Diaz III, CMCA, AMS, Worth Ross Management Co., Inc. AAMC
These are questions that you might consider asking the insurance agent or broker when your BOD is looking to renew or purchase insurance for the HOA. Prior to contacting the agent, managers can do some research to get a better understanding of the building’s needs. These are items you might consider:
- Use the FEMA website maps to determine the location of any flood plans and see if the building is in a flood plan area. If so, I alert the agent to this fact and send them a copy of the map you printed: https://msc.fema.gov/portal.
- Research the last time a building valuation was completed. If you can’t find it or it’s been more than 3 years since the last one was completed, order a new one. Your agent should be able to recommend a company to assist you. Knowing this the value helps in case of total loss. This will help the BOD request full replacement value should there be a need to rebuild. Some policies do this automatically so make sure you are aware if yours is or is not one of those.
- Ask the representative for various deductible options for the BOD to consider. Each level will result in an increase or decrease in the overall policy costs. Note that some items may have a standard deductible which may be changed depending on the various options available via that policy.
- Ensure that your insurance representative knows that the BOD would like to review and may seek protection from updated building and other city/county codes by requesting a quote for Law & Ordinances Insurance to cover any financial gap caused by new building codes and ordinances.
- Inquire as to any coverage included or available for purchase for Earthquake, earth shifting or other similar perils which may not be common in your area.
- Some areas in the USA offer additional coverage for foundations and other structural concerns for “below ground” items. This may be hard to find, but I make it a point to ask the agent to explore these options because this can be a costly repair if needed.
- Ask that the deductible and limits for each type of item covered is clearly shown so that the BOD has a full understanding of what their coverage limits are. Once that is determined, ask for various options for the Umbrella coverage. Usually coverage starts at $5M and can go as high as $25M with just a slight increase in your payment. Try and get at least $20M since it is relatively inexpensive.
- Inquire about various options for D&O, Errors & Omissions, Employee Dishonesty/Theft which usually fall into the Crime/Fidelity coverage and can vary by carrier.
- Ask about wind, windstorm and hail. There are usually various options and deductibles available and in this part of the country it’s recommended you explore the options so you can present them to the BOD.
- Have a clear understanding of fire, and other perils which are typically covered or suggested by the agent. Some agents refer to this as “special form” which refers to their standard coverage proposal.
- Ask the agent to provide any additional information about policies or recommendations which they may have so that you get a professional’s input on any additional items the BOD may choose to explore.
- Lastly, once the new policy is bound, you might ask your agent to attend the next BOD meeting to give a short overview of the policies and coverage. This allows owners to ask questions and get a better understanding of how the BOD has elected to protect everyone financial and structural interest.
These are ways that may help you address insurance renewals or the purchase of new insurance. These are all just recommendations which I hope will help my fellow managers. Even if you have been in the business for years, it might be wise to review this information with your broker or agent. Knowing the various policies and limits that are in place are key components we should all understand.