By Dea C. Franck, Esq.
Your association insurance agent’s knowledge and expertise can be critical to the health and longevity of your community. Yet, association boards of directors often forget to consult with them.
Meeting with your association’s insurance agent every year not only allows your board to get to know your agent personally, but it gives your agent the opportunity to explain the association’s insurance coverages, recommend any changes in coverage, and answer any insurance questions your board may have.
Your fellow homeowners may also be surprised to find out that the association’s master policy does not provide the broad coverage they think it does. Homeowners usually make this discovery when their home has been damaged and they find out there is a gap in coverage between the association’s master policy and their individual policy. In an effort to prevent such an unwelcome surprise, boards should ask their association’s insurance agent to prepare a letter to the homeowners which explains what the association’s master insurance policy will and will not cover. The association’s agent should review and update the letter annually. While not legally required, this letter can be included in your association’s annual budget report and policy statement and would supplement the association’s insurance information that must be disclosed to the homeowners yearly.
Finally, every year the association’s insurance agent will likely ask the association to fill out insurance applications in order to renew or purchase insurance coverage. The information provided by your association on these applications is extremely important because your association’s insurance policies will be underwritten based on the information provided therein. Upon receipt, your board should review and fill out these applications to the best of its knowledge. If your association contracts with a professional management company and your community manager fills out these applications on your board’s behalf, the board should review the responses provided for accuracy and thoroughness. Failing to disclose or providing inaccurate information as requested on the application could result in the insurance carrier either refusing to provide coverage for certain claims or rescinding or cancelling the policy. Any questions about how to fill out an insurance application should be directed to your association’s insurance agent.
Your association’s insurance agent is the expert when it comes to your association’s insurance policies. When in doubt, do not hesitate to contact them for advice or clarification. This is part of the service they provide.