For co-ops, condos, and HOAs, insurance premiums are some of those quiet necessities that tend to fly under the budgetary radar until it is time to examine the bottom line, provoking a search for savings.
Without a doubt, insurance expenses can be significant. Fortunately, examining risk and liability can bring those costs down…and keep them down. Certainly, this process requires a time commitment from board members, managers, residents, and insurers; in the end, however, reducing risk not only saves on premiums, but helps to make the community a safer, more efficient place to live, as well.
Taking Those First Steps
Sometimes, issues of liability and risk are examined only after problems have occurred. However, as pertinent information becomes increasingly accessible to boards and associations in this modern era, the instinct to be reactive has ceded to a more proactive vigilance.
As Edward J. Mackoul, president of Mackoul & Associates, an insurance agency in Old Bridge, New Jersey, explains, "the benefits of being proactive are numerous, including lower insurance costs in the long-term because less claims are being submitted, not to mention a property that is safer for residents and their guests. People are more educated these days, as there are many areas that highlight important issues, including The New Jersey Cooperator and similar publications, social media, websites and seminars offered by specialists in the community association arena."
Often—too often, in fact—issues of liability and risk are examined only after problems have occurred. Usually, insurance holders address matters “because something bad has happened,” says Robert M. Prince, a partner at the law firm of Chatt & Prince, P.C., based in Hinsdale, Illinois. “Someone has been hurt or a lawsuit filed…it’s more reactive in nature. Other times, a new case or law comes out and that prompts boards and managers to look at how they’re doing things,” he says.