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Do You Have a Good Condo Association Insurance Agent?

Are you comfortable with your condo association insurance agent? This is one that is over looked the most. Did you know that you can keep the same condo association insurance company but change agents? This can be done pretty easily without lapse in condo association insurance coverage, without payment interruption. If you believe you condo association insurance agent is not answering your questions or you feel that is not an "expert" and would like an condo association insurance agent that devotes all his time to Condominium Association Insurance, Homeowner Association Insurance, HOA Insurance and Timeshare Association Insurance then by all means make a change. Some of the money that you pay goes to the condo association insurance agent and if he is not doing a good job or if you feel uncomfortable make a change immediately.

What is an association master insurance policy?


Condo Associations and Windstorm Insurance

Even if association storm-proofs units, Florida requires purchasing policies

The standoff over whether to purchase windstorm insurance brewed for several years at Greenbriar Condominiums in Boca Raton.  Board member Walker Crewson argued that Florida law required the association to have it. But his fellow directors declined to purchase it because the association had invested heavily in storm-proofing the property and had windstorm coverage for the clubhouse.

They said Greenbriar's governing documents did not require windstorm insurance unless three-quarters of the 24 units voted in favor of it, and if Crewson was right, each owner would pay a lot more.

"It was hard. I didn't want to make enemies of my neighbors," said Crewson. On the other hand, if the condo did not have windstorm insurance, it could face up to $5,000 per violation. If the Florida Department of Business and Professional Regulation needed to enforce the order in court, there also could be court costs. Plus, in the end, the agency would require the association to obtain condo association insurance.

After years of debate, Crewson and another unit owner contacted the state. Here is what they learned:

1. Florida law requires all condo associations to buy windstorm insurance. And state law supersedes conflicting condo law. Crewson's fellow board members believed the association had met the law's intent by having other forms of insurance - flood, liability, etc. - and by having spent more than $200,000 on storm-proofing the building and units, including installing impact glass, wind-proof garage doors and strapping down rooftop air-conditioner equipment. But the DBPR, which oversees condo associations, let Greenbriar know it was indeed in violation.

Greenbriar, which lies on the west side of State Road A1A, now is in compliance, say directors.

2. There are no exceptions to the windstorm insurance requirement.

But associations may obtain condo association insurance through a self-insurance fund or through a group policy as approved by the Office of Insurance Regulation, said a DBPR spokesperson.

"But the law is not fair," said Greenbriar vice president Arnold Cohen. "If a condo can prove it has storm-proofed its property, it should be able to decide for itself whether windstorm is needed."

Cohen says each unit owner was assessed approximately $8,300 to storm-proof the buildings and now must pay an additional $1,600 to cover higher insurance bills.

"This law is putting a lot of pressure on people who don't have that kind of money to shell out," said Dick Verro, president of Greenbriar.

Cohen and Verro want lawmakers to consider an opt-out provision for condos built or retrofitted to withstand a major hurricane.

It may be a tough sell.

"I don't think there is much appetite to change the law. Mitigation is no guarantee that you won't be damaged. And let's face it, if we get a Category 4 or 5 hurricane, there will be some damage," said State Rep. Ellyn Bogdanoff, R-Fort Lauderdale, whose office was called by Cohen for possible help.

Bogdanoff says the purpose of the law is to make sure unit owners are able to move back home as soon as possible after a destructive storm. "We also enacted legislation in 2007 to reduce windstorm insurance costs," she said.

3. Florida law requires all condo unit owners to insure their interiors.

Bogdanoff said that is likely to change in the 2009 legislative session because lawmakers' intent simply was to delineate what the association was responsible for. And that includes the exterior, up to the drywall.

"I have submitted the language to reverse the requirement for unit owners to purchase individual policies," she said.

However, Rep. Julio Robaina, R-Miami, who pushed for the mandate to be removed, warned "If you go bare like that, you should know that you will be responsible for everything inside your unit."


HOA Should Buy Flood Insurance

Question: I have recently been elected to the board at our condo association, The previous board was informed that because of a revision by FEMA in May of 2007, we now have 5-6 Buildings located in an AE flood zone. Some of our residents found out about this when we were notified by lenders (banks) that, because we had a mortgage, we were required to have flood insurance. Our board refuses to help by saying that we should pay off our mortgage, and it was not a concern for them and they didn't have to provide insurance. I informed the board that I wanted it on record that they were liable if in fact any buildings in this zone were damaged. Because I needed insurance for the bank, I was required to pay for a Flood Elevation Certificate for my building, which is 12 units, and then purchase an insurance policy. My question is, should the association pay for flood elevation certificates? What is the liability of the board and the association on providing insurance for the buildings in the flood zone? Please note an AE flood zone is based on the fact there could be a flood one time in 100 years. I believe that the association is at risk.

Answer: The Condominium Act requires a unit owner-controlled association to use its best efforts to obtain and maintain adequate insurance to protect the association, the association property, the common elements and the condominium property required to be insured by the act. An argument could have been made that this includes the obligation to obtain flood insurance for condominiums in a flood zone. Under the FEMA guidelines, the association is the correct party for acquiring flood insurance, not the individual unit owners. I have personal knowledge of a condominium in the Florida Panhandle which was washed away by an hurricane; there was no flood insurance. The board didn't want to spend the money. While there is case law holding that the board is not liable for the exercise of its business judgment, so long as the individual board members are not guilty of self-dealing, the absence of flood insurance will impact the ability of individual unit owners to obtain financing on their units. Personally, I feel the board is not acting in the best interests of the unit owners.

Q: We enjoy your weekly column and hope you can give us an opinion on the duties of our board of directors. First, some background: We are a small (37 lots) association with a three-member board. The president has been in place for the last four years. She has determined that she is the treasurer as well as the president. Several of the homeowners feel that this is not the best business decision and does not provide the necessary checks and balances for sound business practices. We would like to bring this up at our annual meeting, but before we can bring it up, we would like to present some reasoning for a change. What is your opinion of this practice?

A: While not favored, without a provision in the articles of incorporation or the bylaws prohibiting same, the president can serve as a dual office holder (e.g., president and secretary, president and treasurer). This is expressly provided for in the Not-for-profit Corporate Act (Chapter 617, Florida Statutes).

Q: Where would it say what the exemptions are, since our declaration that refers to mortgagees being involved in any declaration changes only says "No amendment shall be passed which shall materially affect the rights or interests of any mortgagee without the written prior consent of such mortgagee."

A: The Condominium Act provides that, as to any mortgage recorded AFTER Oct. 1, 2007, the requirement of mortgagee consent only applies to amendments which change the proportionate share of ownership and sharing of the common expenses, and amendments which permit time sharing in a condominium which previously did not, and amendments which adversely affect the rights and interests of unit mortgagees.


Condo Association Insurance - Liability Areas

Community associations are non-profit organizations created to manage the community for its members. A board of directors is elected by the members to provide this management through the collection of dues, enforcement of deed restrictions, and other duties necessary to provide association services and protect property values. Despite an association's role as a non-profit organization and the board's volunteer status, management of an association includes legally-accountable duties and responsibilities.

The normal operation of a community association exposes it to risk of accidental loss. There are five basic types of loss faced by an association:

Property-buildings, land, inventory of equipment, supplies, furniture, signs, outdoor property and records

Commercial General Liability-third party property damage, bodily injury, or personal injury due to negligence

Income-loss of dues, maintenance fees

Workers Compensation-actions taken by an employee of the association resulting in bodily injury or uninsured/underinsured subcontractors hired by an association

Directors and Officers-providing coverage for "wrongful acts" by D&O's.


Despite these risks, a condo association's board of directors can take certain actions to minimize the exposure to loss through:

Reserve studies that will provide them with exact replacement cost values for all property, examining financial statements, maintaining accurate records, routinely inspecting property to ensure safety and maintenance issues, and hiring a professional manager and other industry experts.

Analysis of association policies and procedures to identify unsafe practices, which if changed, can reduce exposure and loss.

Transfer their risk for service-related tasks by hiring reputable, fully insured contractors for certain projects. While implementation of safety controls can reduce risk procedurally, an association may find that risk is best limited through financing.


Despite careful planning and management, associations must prepare for inevitable losses. Risk management can be either self-financed or transferred to a third party:

Self-financed-an association can finance risk by maintaining a reserve account to pay for damages or loss suffered or caused by the association and its employees.

Transferred to Third Party-an association can transfer the financial burden of damage and loss to an insurance company through purchase of a commercial insurance policy(s).


As most associations operate with limited funding and reserves, purchase of an insurance policy can provide the greatest risk protection at limited cost. Often, most associations' governing documents require the purchase of certain insurance coverage. Federal regulations, state laws, and local ordinances can also establish insurance requirements for a community association. It is important for the board of directors to  understand the coverage required and to assess the exposure of the association in order to determine the proper insurance policies as reflected above.

It is also recommended that a board develop a bid request form in order to review bids uniformly. Determining what insurance policies to purchase and from whom is an important and necessary duty for protecting the association and its assets.

Source: Association Times

What is an Association Master Insurance Policy?


Why Review Your Condo Association Insurance?

All too, often some accident or casualty occurs, a claim is submitted to the Condo Associations insurance agent for forwarding to the carrier, and a response is received informing the Board and its Manager that this is not covered, or some obtusely worded exclusion applies.  Likewise, all too often these letters go on for pages quoting provisions from the policy which, in all candor, even we lawyers are hard pressed to follow.  Considering recent trends in court decisions holding Condo Associations liable not just to third parties, but to unit owners upon ever expanding bases, this presents a particularly troublesome issue.  And the problem can be particularly acute where a Unit Owner suffers property damage as a result of some negligence on the part of the Condo Association.

            One situation we faced involved a claim of smoke damage.  As part of its winterization of a predominantly second home, summer condominium complex, the Association capped the fireplace flues - that is, they sealed them with plastic, Unfortunately they failed to inform the owners of this and someone came down for a nice winter weekend, lit the fire in the fireplace, layed back on the couch with a fine brandy and a good book, only to have smoke pour back into the unit.

            The Condo Association filed a claim under its master casualty policy.  However, as in common, it excluded the personal property of the Unit Owner and, as is becoming common, it continued a large deductible.  As is equally often common the Unit Owner had no Condominium Owners Policy (an HO-6) and, thus, demanded that the Association pay for the cost of cleaning his expensive living room furniture, drapes, etc. 

            The Insurer took the position that since the Unit Owner was a named insured under the policy, a claim could not be made under the liability portion of the policy.  Rather, the Association could only collect under the casualty loss portion.  However, that only covered the Unit and not the Unit Owners personal property and was, as mentioned,  subject to substantial deductible.

            Fortunately, in that situation we were able to negotiate a resolution with the Insurer.  However, another similar situation has arisen with another of our clients and this time the Insurer isnt flinching yet.

            All this points to the need by Boards and their Managers to carefully review insurance proposals.  It also, unfortunately really points to the need to bring in qualified, independent insurance advisors to develop specifications for the Associations insurance needs and/or for the Association to have its counsel thoroughly review policies.  Many insurance policies, though seeming the same on the surface, are materially different when their terms are peeled back.  Facing this problem after a loss is not a pleasant experience. Rather, making the extra effort in obtaining the policies can avoid unpleasant surprises.

Source: Marcus, Errico, Emmer & Brooks, P.C.

What is an HOA Master Insurance Policy?


HOA Insurance - Directors and Officers (D&O) Liability Insurance

Every director and officer of a homeowner association board has personal responsibility for HOA business. 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.

General liability insurance will not protect directors and officers in the same way. This insurance is to cover against third party bodily injury and property damage. Directors and Officers insurance covers against third party financial damages and other claims not covered under General liability.

Here's a list of scenarios in which directors and officers have liability:

  • Continuing a wrongful practice after learning it's wrong

  • Libel or slander

  • Failing to pay HOA debts in a timely manner

  • Improper management resulting in losses

  • Receiving personal gain while performing as director or officer

  • Making decisions based on adequate information and advised judgment

  • Ignorance of HOA books and records

  • Verifying content of official documents before signing

  • Obedience to the governing documents

  • Self dealing

  • Aiding and abetting illegal actions of others

  • Conflict of interest

  • Carelessness in conducting business or legal matters

  • Failing to see what could be seen by merely looking

  • Inducing intentional or careless wrongdoing

  • Ignoring statutory or regulatory requirements

  • Insufficient oversight of officers or employees

  • Nondisclosure of questionable or unlawful actions

  • Willful wrongdoing

Because of all these traps and pitfalls a director or officer could fall into, D&O insurance should never be optional. No one should serve on a board without it unless, of course, you have absolutely nothing to lose. I personally don't know one person that doesn't. Do D&O.

What is a condo association master insurance policy?


Steps to buying HOA Insurance or Condo Association Insurance

HOA or Condo Association insurance is provided by the board of directors. This is known as a Master Insurance Policy to cover all common areas of the HOA or Condo Association's property.

  • Survey all areas to be covered under the homeowners association insurance policy. As a precautionary measure, explain to all association members exactly what grounds are covered under the HOA and what is covered under homeowners insurance. The standard HOA policies cover damage caused by wind, fire, rain, flood and lightning.
  • Consult an agent who specializes in HOA insurance or condo association insurance. An agent will guide you in the right direction, explain what is covered and advise what coverage limits would be appropriate for your housing plan. In addition to structure coverage, the HOA insurance policy also covers employee dishonesty, theft errors and omissions.
  • Calculate each portion to be covered under HOA insurance and how much it would cost to replace that portion of all the buildings and property maintenance. Establish a reserve for funding when it comes time to replace roofs, gutters and downspouts, pool/spa maintenance and concrete repair. Whether short term or long term, there are always maintenance and repairs that need to be done. Ensure you have adequate funds to cover these. If there is not enough funding available, it could result in lawsuits from the homeowners for negligence or injury. Funds are normally established by homeowners paying the homeowners association fees.
  • Ask insurance agents what types of insurance other homeowners associations of similar size and shape to yours typically buy and what is recommended for your particular homeowners association.
  • Talk with the officers of your homeowners association to get their views of what types of insurance are needed. No one knows your homeowners group better than the officers and those who live there.
  • Identify all board of directors as employees for the HOA insurance only. This way they are covered under the theft and dishonesty portions of the HOA.

What is a condo association master insurance policy?


What is a Condo Association Master Insurance Policy?


Minimize Your Community Association Risk Against Current Housing Trends

When the housing market encounters a downward trend, and most recently accelerated by the rapid decline of the mortgage industry, cash-strapped homeowners must balance whom to pay, whom not to pay, and what to pay for. Sadly, many have decided to relinquish the maintenance on their homes.

In some cases, owners are abandoning their home, awaiting foreclosure. An abandoned home can directly impact the condo association and its members. Owners with no means of financial support are not able or willing to spend money on what they consider low priority - maintenance on their homes, which they do no expect to own much longer. Homes with pools are left without regular services, resulting in major health issues. Unkept lawns can result in brown grass, overgrown shrubbery, and trees untrimmed for many months. At times newspapers and junk mail accumulate on the property. A home in foreclosure can mean an empty house, which can then be a target for vandals. Owners, hoping to keep their property, may consider renters, who may not not have the same sense of ownership and pride in the community. Some renters can make it harder to enforce the rules and comply with community standards. Not only are maintenance problems an issue, but association dues may drop low on the priority ladder, maybe even being totally ignored.

Onsite owners are affected, too. Neighbors may continue to pay their association dues, but feel frustrated that nothing can be done thei neighbors' delinquency and the low rate of maintenance. To them, a foreclosed home is still private property owned by someone, and problems at that property should be addressed by the association. At times, these owners may take upon themselves the task of completing maintenance at neighboring property, just to protect their own property value. Or these owners stop paying their dues in retaliation of what the association is not doing to protect the community.

And what happens if an association and its management firm attempts to maintain the property? Can they run into legal trouble if they turn on water or mow the lawn? Are they expending association funds that may never be recovered from the delinquent owner? Add to the problem the fact that the association may not have enough funds to maintain its own assets, much less maintain an owner's property. Should the association hire a maintenance service to handle extreme cases of health risk or potential extreme hazards, such as patrols to fend off vandals?

As the housing crisis deepens, so can association problems. Hurt by the slump in housing sales, builders are opting not to pay their association dues. Pursuing and collecting on those dues erodes an association's resources Collection of monthly dues is critical for maintaining common areas and solidifying long-term reserves. Association dues keep the pool clean, buildings painted, and landscaping maintained. Associations are considering shutting down clubhouses or decreasing the frequency of necessary services such as trash removal, pool maintenance and grounds upkeep. Gated developments usually have an even higher monthly or annual fee ecause of the additional common elements that must be maintained Trying to collect an owner's delinquency through a lawsuit costs the association money that the association may never recover. So, the delinquency can be less than a collection lawyer's retainer fee. Officially recording a lien on a property may also cost more than the delinquent amount. It can be a struggle for the association to deal with these delinquencies that turn into foreclosures.

What happens in a foreclosure? The foreclosure process for residential mortgage loans is a lengthy ordeal in which the secured creditor (lender) sells or repossesses a parcel of real property after the owner has failed to comply with the mortgage agreement which is secured by a lien on the property. When the foreclosure lawsuit process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its lien". The association has the same enforcement tool: the lien. An indebted homeowner who wants to sell or refinance his or her property would also need to satisfy the association's lien. But a lender foreclosure eliminates an association's lien, meaning the association can no longer foreclose and a lawsuit against the owner personally is often the only way for an association to possibly collect back payments. If an association begins the foreclosure process before the lender does, the association has a better chance of persuading the owner to pay delinquent maintenance fees before losing his or her home.

Many associations have already suffered through many of these financial situations. What steps can your association take to strengthen its financial position and minimize its risk?

  • Review your collection policy - tighten up the association's procedures. Are the collection notices being sent out in a timely manner and delinquencies referred to the attorney promptly? Research your governing documents and state law to verify that the all possible collection activities are taking place.

  • Evaluate the reserves - Review the status of your association's reserve accounts. Are they adequately funded to make it through a downturn in the economy? Make sure that if you are considering "borrowing" from the reserves as a means to offset a decrease in assessment revenue, that your reserves will remain well funded.

  • Look at the association's service contracts - perhaps there are discretionary services that can be temporary eliminated that will not cause long-term damage to the association's assets.

  • Cost saving ideas - eliminating necessary services obviously does not support the mission of the association to preserve and protect property values. However, you may need to implement some short-term fixes to ensure the sustainability of the association.

  • Making the most of your money - are your association funds getting the best yield while still complying with investment requirements detailed in the governing documents and state statutes?

  • Raising assessments - while this option will not be appealing to the owners, it might be required. The Board should consider all available options, and remember that they have a fiduciary duty to the association, and raising assessments may be the only remedy to offset increased costs and/or declining collections.

Being ready and prepared to make it through these financial times will greatly improve

Source: Association Times


Does Condo Association Insurance Cover Condo Unit Damage?

I live in a condo association high-rise and I pay monthly HOA fees.  My water heater leaked recently and damaged part of my carpet and walls.  Building maintenance replaced the water heater and repaired the damaged areas and have presented me with an $8,000 bill along with documentation of the work completed.  

When I bought the condo, my lender (who was working on-site in the building) told me that they didn't require separate homeowner's insurance or condo insurance because it was covered in my HOA fees.  Checking my HOA by-laws seemed to confirm that:  "....said condo association insurance policy shall cover all condo units, including but not limited to, condo insurance for such property as wall and floor coverings....".  Assuming this, I didn't purchase additional condo insurance coverage.

My Condo Association is now telling me that the condo association insurance coverage only applies to circumstances where the Condo Association is responsible for the damage and therefore I'm not covered at all. Nowhere in the condo association by-laws is this made clear. It describes an all-risk condo association insurance policy paid for from the HOA fees and names all Condo owners as insured by the condo association insurance policy.

Do I have any recourse?  Is it worth having a condo association attorney look over the condo association by-laws and condo rules?

There are more variations of HOA rules than there are playing cards in a deck.  You definitely need someone to read the HOA policy and give you a decision or at least point you in the right direction.  If you have car insurance, my first suggestion is to have your agent read the HOA insurance policy and give you his opinion.  If he sells condo insurance he may be fully qualified to be of help.  Also, he won't charge you for his help.

A Condo Association Attorney is going to charge from $350-$500 per hour for his time.



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