The debate as to whether to hire a professional management company, given the financial burden, or to continue to be self-managed is a difficult one. When dealing with insurance, associations have four major issues they need to consider: communication, claims, renewal coordination, and budgeting.
Communication key, the association needs a point of contact who has the authority to make decisions on behalf of the board. According to policy all unit owners are considered “insureds”, it allows any unit owner the authority to make decisions regarding the association. This includes claim submission and policy and coverage alteration, it is difficult for the agent to determine who has authority to make changes.
If all unit owners can submit claims, the policy could be treated as a “maintenance” policy, causing more frequent smaller claims. Insurance carriers often prefer larger claims that are fewer and far between; than the small claims that happen on a more frequent basis
When a claim is submitted, factors are; adjuster selection, remediation, money allocation, and rebuild to name a few. Scheduling and fund allocation is important; navigating the emotion of unit owners when they have damage in their units can be tricky. All units affected by a claim will think that they should have priority, managing the emotion and demand of the unit owners is a difficult balancing act.
Policy renewals are an important time to verify coverage and control costs. The association and agent must work together to make certain that the proper coverage remains in force with no lapses. A lapse in coverage can be damning to the association, not only will there be a period with no insurance, but in the future, other insurance carriers will question why coverage was suspended, causing hesitation to quote for the association’s coverage. A good agent will not allow a coverage lapse, but not all agents have the same business practices.
Association budget includes maintenance, accounting, legal matters, and special projects. Insurance is a complicated line item in the budget, with many factors determining pricing. Proactive lines of communication are key to determining what can be one of the largest costs for the association. Property managers provide coordination of board meetings and streamline communication.
A property manager assists the board in determining a budget, handling maintenance issues, unit owner conflict resolution, communication with business partners, collection of fees, and ensuring that board meetings are run properly. A knowledgeable property manager has the experience of working with associations and also proactively attended classes and other training to gain a better knowledge of the many facets of running a condo association.
By Brendon Kilcoyne
This is an excerpt of an article which appeared in Condo Media Magazine February 2020 edition