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Auto & Homeowners Newsletter - October 2018

Practice Wise Risk Management for HO/Condo Association Loss Exposures

Many people volunteer in their homeowners or condominium association, serving as directors, officers, and editors of association newsletters. If you are an active member of your association, consider the following risk management tips and recommendations.

• Verify that the association has directors and officers (D&O) liability coverage in force with reasonably high limits. If the association chooses not to obtain D&O coverage, then you should seriously reconsider your leadership activities within the group due to your unprotected liability exposure.

• If D&O coverage is in place, confirm that this policy provides errors and omissions coverage for the proper purchase of insurance. To do this, verify that the "failure to maintain insurance" exclusion is not attached to the D&O policy. Other potential condo D&O policy exclusions to check for are those barring coverage for claims arising out of (a) professional services, (b) failure to maintain property, (c) failure to establish or maintain adequate reserves or levy special assessments, (d) failure to take legal action, and (e) excessive noise. Some of these exclusions are relatively rare and can likely be negotiated out of policy wording.

• Ask your association to hire an independent insurance consultant to audit the association insurance program to uncover any potentially lethal coverage gaps. For example, homeowners associations should have at least the following types of coverages: guaranteed replacement cost property coverage for common areas, commercial umbrella coverage, workers compensation insurance (even if there are no association employees) to cover claims brought by uninsured independent contractors, and D&O liability coverage.

• If you don't already have it, consider adding a personal injury (HO 24 82) or related endorsement to your homeowners/condominium policy.

• Make sure you have a personal umbrella policy in place—it often covers personal injury losses (with a small self-insured retention limit.)

Copyright 2018
International Risk Management Institute, Inc.


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