For many people, insurance seems like its own mysterious realm, filled with terminologies that sound formidable and enigmatic. At the same time, people also understand the profound importance of insurance and what it can mean for the safety and security of the co-ops, condos, and associations in which many of us live.
Fortunately, insurance professionals have vast experience in making the cryptic understandable and helping neophytes – whether they are unit owners, shareholders, or board members – find clarity in the world of deductibles and umbrellas.
Getting Down to Basics
For board members and managers, there are a few key terms that experts agree should be familiar to all, given the high stakes involved in the administration of people’s homes and investments. “There are four major areas where associations are exposed to losses: property, liability, funds/assets, and workers’ compensation,” says Jennifer Eilert, commercial lines manager for Condominium Insurance Specialists of America (CISA), in Elgin, Illinois.
At that most basic level, says Eilert, “Property coverage can include exposures for real property (such as building structures); personal property (such as association-owned contents); equipment breakdown for boilers, hot water heaters, elevators, and central air units; broad form water coverage; ordinance coverage; and flood, earthquake and terrorism coverage.”
In terms of liability for the building’s volunteer leaders, the coverage known as directors and officers – or D&O – is a must-have. “That’s what covers the board for the decisions they make,” says Ed Mackoul, president of Mackoul & Associates, Inc., which has offices in Long Island, New York City, and New Jersey. “General liability typically covers bodily injury and property damage to others and is typically required by the bylaws, as well as lenders for both the owners and a co-op, but directors and officers liability insurance isn’t required by either and is extraordinarily important.”