Purchasing homeowner association insurance is one of the most important buying decisions the board will make. The decision addresses risk management and must meet or exceed any insurance requirements mandated by the state and the HOA's governing documents.

Step #1: Start Early. Begin the process at least 90 to 120 days prior to the renewal date by ordering updated loss histories from all insurance carriers who have provided coverage for the Association for the past three to five years. While requesting the loss history, don't forget to confirm with the current agent/broker his opinion as to whether the current insurance carrier will be offering a renewal.

Step #2: Check Loss History Accuracy. Losses can be miscoded (like "Mold Claim," when it wasn't), or a loss that should have been attributed to a different insured or a loss that continues to appear on the loss history even though the insurance carrier successfully subrogated against the negligent party (got repaid). It's also possible your carrier's version of your loss history doesn't really reflect today's condition of the property. If your HOA has taken steps to improve the property since the losses occurred, write a narrative about those steps taken and attach it to the loss history. If a particular problem has since been corrected, make sure the carrier knows it.

Step #3: Assemble a Complete Bid Package. Preparing a complete bid specification will make the evaluation process easier. The bid package should include:

Instructions

• Step 1:Survey all areas to be covered under the homeowners association insurance policy. As a precautionary measure, explain to all homeowners exactly what grounds are covered under the HOA and what is covered under homeowners insurance. The standard HOA policies cover damage caused by wind, fire, rain, flood and lightning.
• Step 2:Consult an agent who specializes in homeowners association insurance. An agent will guide you in the right direction, explain what is covered and advise what coverage limits would be appropriate for your housing plan. In addition to structure coverage, the HOA insurance policy also covers employee dishonesty, theft errors and omissions.
• Step 3:Calculate each portion to be covered under HOA insurance and how much it would cost to replace that portion of all the buildings and property maintenance. Establish a reserve for funding when it comes time to replace roofs, gutters and downspouts, pool/spa maintenance and concrete repair. Whether short term or long term, there are always maintenance and repairs that need to be done. Ensure you have adequate funds to cover these. If there is not enough funding available, it could result in lawsuits from the homeowners for negligence or injury. Funds are normally established by homeowners paying the homeowners association fees.
• Step 4:Obtain several insurance quotes. Amounts of coverage and premiums vary according to how many units are in the housing plan.
• Step 5:Ask insurance agents what types of insurance other homeowners associations of similar size and shape to yours typically buy and what is recommended for your particular homeowners association.
• Step 6:Talk with the officers of your homeowners association to get their views of what types of insurance are needed. No one knows your homeowners group better than the officers and those who live there.
• Step 7:Identify all board of directors as employees for the HOA insurance only. This way they are covered under the theft and dishonesty portions of the HOA.

Tips & Warnings

• Hire a survey professional to look at your homeowners association insurance needs.
• Protect against lawsuits from homeowners by clearly stating what is and what is not covered under the HOA, and also state that all homeowners must have homeowners insurance. This way, HOA insurance is left to help with major damage to multiple units in case of disaster.

Purchasing condo association insurance is one of the most important buying decisions the board will make. The decision addresses risk management and must meet or exceed any insurance requirements mandated by the state and the HOA's governing documents.

Step #1: Start Early. Begin the process at least 90 to 120 days prior to the renewal date by ordering updated loss histories from all insurance carriers who have provided coverage for the Condo Association for the past three to five years. While requesting the loss history, don't forget to confirm with the current agent/broker his opinion as to whether the current insurance carrier will be offering a renewal.

Step #2: Check Loss History Accuracy. Losses can be miscoded (like "Mold Claim," when it wasn't), or a loss that should have been attributed to a different insured or a loss that continues to appear on the loss history even though the insurance carrier successfully subrogated against the negligent party (got repaid). It's also possible your carrier's version of your loss history doesn't really reflect today's condition of the property. If your HOA has taken steps to improve the property since the losses occurred, write a narrative about those steps taken and attach it to the loss history. If a particular problem has since been corrected, make sure the carrier knows it.

Step #3: Assemble a Complete Bid Package. Preparing a complete bid specification will make the evaluation process easier. The bid package should include:

1. Brief description of the property including the number of units, year built, type of construction, overview of amenities (pools, spas, etc.) and any other structural improvements the HOA may have an insurable interest in;

    

2. Copies of the governing documents;

    

3. Copy of the site plan;

    

4. Current three year loss history on the prior carrier's letterhead;

    

5. Copies of the declarations page from the current year;

    

6. Copies of the HOA's most current financial statement and budget; and

    

7. Current appraisal (if available).

Steps #4: Assign the Markets. An condo association insurance carrier will only release a premium quote to one agent. If more than one agent wants to use the same insurance carrier, you'll have to assign which person will access that market on your behalf.

Step #5: Evaluate the Insurers. While there are five well-known insurance rating organizations, most HOAs rely on AM Best. The letter grade ratings (A through F) and financial size categories (Roman numeral I through XV) can give you a quick barometer of a carrier's health. In addition to the financial ratings, the board will want to consider the carrier's experience with HOAs. A carrier who is new to the homeowner association market is probably not a good fit.

STEP #6: Is the Agent Qualified? Consider years of experience insuring Condo Associations and HOAs and involvement in industry trade organizations like California Association of Community Managers (CACM), Oregon Washington Community Association Managers (OWCAM) and Community Associations Institute (CAI). The agent/broker professional designations should include CPCU (Chartered Property and Casualty Underwriter), ARM (Associate in Risk Management), CIC. (Certified Insurance Counselor), and CIRMS (Community Insurance and Risk Management Specialist).

STEP #7: Use a Spreadsheet. Even the most experience risk manager will create a "line by line" comparison of the coverages and benefits being offered by the various companies offering a proposal. A visual representation of this type will easily illustrate the merits or deficiencies provided by one proposal over another and will tell you if a certain proposal is competitively priced only because the agent/broker has omitted an important insurance coverage.

STEP #8: Let Price Be the Last Consideration. Price is important but don't fall into the trap of going to the "bottom line" first. If you do, you may forget the number one goal of buying insurance: protecting the HOA's assets. Be certain that you're getting what you need before signing the check.

Insurers have taken nearly 400,000 policies out of the state-run Citizens Property, considerably reducing its exposure.

BY BEATRICE E. GARCIA

Fourteen Florida-based insurers have taken 361,324 homeowners' policies from state-run Citizens Property Insurance, reducing Citizens' exposure to hurricane claims by nearly $100 billion.

Another 25,000 policies are expected to exit Citizens by the end of the year.

Reducing Citizens' policy count is desirable because it reduces the company's exposure to hurricane risk and future claims. Yet, the insurer still holds the riskiest policies in the state: 253,785 windstorm policies along the coast in South Florida. Those policies add up to $134 billion in potential hurricane claims.

The bulk of the policies sent to so-called ''take-out'' insurers came from South Florida, including 71,506 policies in Miami-Dade County and another 61,053 in Broward.

Generally, these smaller firms take out policies with no windstorm coverage along coastal areas, but so far this year Citizens has ceded 19,999 homeowners' policies that included wind coverage.

At least one of the take-out insurers is focusing on condo association insurance policies, and so Citizens is able to get off its books 601 of those policies.

At the end of November, Citizens had 1,093,138 policies on its books, representing $411.7 billion in exposure.

Three companies accounted for the bulk of the take-out policies: 116,040 by Magnolia Insurance, based in Key Biscayne; 57,217 policies by Homeowners Choice, based in Port St. Lucie, and 48,217 policies by Florida Peninsula, based in Boca Raton.

Consumers and regulators have some concern about the financial stability of these small companies that are taking policies out of Citizens.

Alex Sink, the state's chief financial officer, has asked Insurance Commissioner Kevin McCarty to report to the Jan. 13 Cabinet meeting on his agency's evaluation of the financial solvency of these companies.

''We are relying on the Office of Insurance Regulation to perform the necessary due diligence around the financial strength and solvency issues,'' said Sink in a letter to McCarty asking for the presentation.

At a Citizens board committee meeting in Jacksonville Thursday, Citizens' chief financial officer Sharon Binnun said the takeouts are reducing the premiums collected by the company. She noted that many of the policies leaving include some of Citizens' larger policies with higher premiums.

Homeowners who receive an offer from a takeout insurer don't have to accept it if they would like to remain with Citizens.

Takeout companies are required to keep the policies they assume from Citizens for three years. Citizens has paid a bonus to takeout companies in the past, but not now.

Dubai's buyers can finally decide to have a sigh of relief, since they can buy now properties insured against any structural damages. The buyers used to be left in lurch until today whenever any structural damage came to light after the properties were handover. They couldn't ask for any legal proceeding or compensation due to the lack of proper laws they had. But, the Real Estate Regulatory Authority (RERA) has finally decided to change this scenario, and introduced a new law which makes developers responsible for damages that might get noticed after the property had been handed over. The buyers will be free to approach the regulatory body whenever there seemed to be any breach of law taking place. Scores of Dubai apartments, furnished villas, hotels and Dubai hotel apartments will come under the purview of this new legislation.

Investors used to withdraw from projects earlier, citing the lack of insurance cover as a reason. Under the new law, however, the developer will be made answerable to courts for any sub-standard construction. For example, any serious wall cracks taking place within the first ten years of property handover, can amount to be a case for compensation. Additionally, any electrical, mechanical or plumbing related irregularities can also be challenged during the first year. Any irregularities in the construction of Dubai apartments, hotels, furnished villas or Dubai hotel apartments could not be challenged in the courts earlier, since there was no clear framework to do it.

In addition, this law adds more clarity about the issue of maintenance of buildings. Under the new directive, a Home Owner's Association (HOA) will be established for each jointly owned property and asked to look after the common areas, such as gyms, swimming pools, parking spaces, entrances etc. They will have to play the role of watch-dogs and see that the buyer's money was properly made use of. It is surprising that, only five percent of Dubai's households carry home insurance coverage, which is too few in numbers compared to what we may get to see from the countries like the USA, the UK, Australia or Japan.

The formation of HOA is key ingredient of this whole exercise. It will be required to maintain and be the beneficiary of the insurance cover in each case, while the constituent members, each having the ownership of one unit, will have to pay up the premium. Dubai may be a late entrant into this exercise, but it is expected to pursue it seriously now, and the buyers and promoters should be getting used to it now. The city needed to have it anyway, with so many high-end Dubai apartments, hotels, furnished villas and Dubai hotel apartments dotting its skyline.

Although, insurance cover is a basic necessity for any real estate buyer, people of Dubai did not shown any keenness about it in the past, may be, since most of them happened to be short term buyers. However, the introduction of the new law by RERA will change this scenario fundamentally, one hopes, and the awareness about property insurance will grow further. Dubai is as much known for its successful commerce, as for its shining real estate, which comprises of lavish hotels, shopping malls, Dubai apartments, villas and Dubai hotel apartments. The new property law by RERA will add more value to its real estate.

Even if association storm-proofs units, Florida requires purchasing policies

The standoff over whether to purchase windstorm insurance brewed for several years at Greenbriar Condominiums in Boca Raton.  Board member Walker Crewson argued that Florida law required the association to have it. But his fellow directors declined to purchase it because the association had invested heavily in storm-proofing the property and had windstorm coverage for the clubhouse.

They said Greenbriar's governing documents did not require windstorm insurance unless three-quarters of the 24 units voted in favor of it, and if Crewson was right, each owner would pay a lot more.

"It was hard. I didn't want to make enemies of my neighbors," said Crewson. On the other hand, if the condo did not have windstorm insurance, it could face up to $5,000 per violation. If the Florida Department of Business and Professional Regulation needed to enforce the order in court, there also could be court costs. Plus, in the end, the agency would require the association to obtain condo association insurance.

After years of debate, Crewson and another unit owner contacted the state. Here is what they learned:

1. Florida law requires all condo associations to buy windstorm insurance. And state law supersedes conflicting condo law. Crewson's fellow board members believed the association had met the law's intent by having other forms of insurance - flood, liability, etc. - and by having spent more than $200,000 on storm-proofing the building and units, including installing impact glass, wind-proof garage doors and strapping down rooftop air-conditioner equipment. But the DBPR, which oversees condo associations, let Greenbriar know it was indeed in violation.

Greenbriar, which lies on the west side of State Road A1A, now is in compliance, say directors.

2. There are no exceptions to the windstorm insurance requirement.

But associations may obtain condo association insurance through a self-insurance fund or through a group policy as approved by the Office of Insurance Regulation, said a DBPR spokesperson.

"But the law is not fair," said Greenbriar vice president Arnold Cohen. "If a condo can prove it has storm-proofed its property, it should be able to decide for itself whether windstorm is needed."

Cohen says each unit owner was assessed approximately $8,300 to storm-proof the buildings and now must pay an additional $1,600 to cover higher insurance bills.

"This law is putting a lot of pressure on people who don't have that kind of money to shell out," said Dick Verro, president of Greenbriar.

Cohen and Verro want lawmakers to consider an opt-out provision for condos built or retrofitted to withstand a major hurricane.

It may be a tough sell.

"I don't think there is much appetite to change the law. Mitigation is no guarantee that you won't be damaged. And let's face it, if we get a Category 4 or 5 hurricane, there will be some damage," said State Rep. Ellyn Bogdanoff, R-Fort Lauderdale Is your Fort Lauderdale restaurant clean? - Click Here., whose office was called by Cohen for possible help.

Bogdanoff says the purpose of the law is to make sure unit owners are able to move back home as soon as possible after a destructive storm. "We also enacted legislation in 2007 to reduce windstorm insurance costs," she said.

3. Florida law requires all condo unit owners to insure their interiors.

Bogdanoff said that is likely to change in the 2009 legislative session because lawmakers' intent simply was to delineate what the association was responsible for. And that includes the exterior, up to the drywall.

"I have submitted the language to reverse the requirement for unit owners to purchase individual policies," she said.

However, Rep. Julio Robaina, R-Miami, who pushed for the mandate to be removed, warned "If you go bare like that, you should know that you will be responsible for everything inside your unit."

Owning and maintaining a home can be expensive these days. Upkeep and maintenance often requires constant attention, and homeowners may find themselves repairing or replacing nearly everything in sight at one time or another-to say nothing of the grass that always needs mowing, the sidewalks that need sweeping or the pool that needs cleaning.

For those who choose condo living over the luxury of the single-family home, life affords a few less responsibilities. Though condo owners must sacrifice privacy and share space with other unit owners in their building, they can choose to watch the NFL game on Sunday, rather than mow the lawn-and stay inside when winter storms dump several feet of snow-while neighboring homeowners are shoveling out.

No matter which type of home you choose, home insurance is required protection before taking possession. That way, when you come home from work to find your door standing open and your electronics missing, you'll have the coverage you need to replace them without going broke. And when your friend comes to visit and ends up biting the dust on your kitchen floor, you'll have the resources you need to cover medical bills following the accident.

So what's the difference between condo insurance and single-family home insurance? When you live in a free-standing home, you insure the home's structure, other buildings and items on the property, and the possessions kept inside your home.

When you live in a condo, on the other hand, you don't need to insure shared spaces like pools or sidewalks, the building your condo is housed in, or any structures that don't belong expressly to you. Those items are usually covered by your condo association's insurance policy instead-leaving you responsible only for your own possessions, appliances, décor, interior-facing walls and other items not commonly shared with neighbors.

If you're looking for a way to build equity (yes, even in these hard times) with less responsibility and cheaper insurance coverage than traditional housing, consider buying a condo. You'll save money and protect your home, too-but your insurance bills should be cheaper!

You finally decided that your residence should be a condominium. Condos can be an appropriate choice for a number of reasons - fewer maintenance worries and no yard work are only some of the benefits. But what about insurance on your property?

In most cases, homeowners insurance differs from condominium unit owners insurance. Homeowners insurance protects the building structure and the items inside, whereas condominium unit owners insurance protects the items you keep within your unit. Also, unit owners insurance may be needed to protect any additions or alterations you have made to your unit.

Know your responsibility. The condo association insurances  building structures and the common areas, like the club house or the swimming pool with the master policy. But master policies vary widely and it's important to read the bylaws and know what is covered by your association and what items are your responsibility to insure.

As a unit owner, there are several insurance coverage options to consider:

• Personal property - protects personal items such as clothing and furniture.
• Building property - protects the additions or alterations you made to your unit.
• Loss of use - coverage for the necessary costs to maintain your standard of living after a major fire, tornado or another insured catastrophe.
• Personal liability - protects you if someone makes a claim or brings a lawsuit against you for bodily injury or property damage for which you or a member of your family are responsible.
• Rentals: If you own a unit that is rented to another party most of time, ask your insurance agent about any special insurance coverage arrangements.

Learn to protect your personal property while living safely within your condominium community.

One potentially confusing issue in condominium associations is who insures what.  In the past, most condominium association policies would cover whatever the association owned.  Other association policies extended coverage into the units - for example, the sheetrock walls and ceiling, the plumbing, and the electrical within each individual unit.  Association policies would often be written broad enough to cover the floor, kitchen cabinets, appliances, and carpeting.

In recent years, with the rising cost of insurance claims and the ambiguous language in some association CC&R's, insurance coverage has changed dramatically.  Many condominium documents specifically detail what is to be covered - - for example:  roof repair and replacement only.  In this instance, the documents are explicitly pointing out that all other structure is not covered.

A Master Package Policy will generally include property coverage that can be categorized by:

	Bare walls - coverage for the common elements, usually excludes property within the unit such as interior walls, permanently installed appliances, fixtures, finishings, floors and ceilings
	Single entity - coverage for the common elements, usually includes initially installed property in accordance with the association's original plans and specifications
	All in - coverage for the common elements, plus initially installed property, plus improvements and betterments made at the expense of the unit owner

An Association should survey and identify owned property which is to be covered by the association master insurance package:

	Buildings - residences, clubhouses, garages, carports; Building definition could include foundations, pipes, wires, conduits, utilities, heating, cooling, security systems, machinery and equipment, balconies, porches, decks, and patios
	Structures - arbors, awnings, cabanas, sport courts, fences, fountains, gatehouses, gazebos, recreation fixtures.
	Other property - could include antennas, indoor/outdoor furnishings, signs, landscaping, fine art.
	Non-covered property - could include bridges, roadways, walks, underground infrastructure.

Common causes for the loss of covered property are categorized accordingly:

	Special form - this is known as an "all risk" form and usually provides coverage for all perils, except those specifically excluded, such as flood, earthquake, war/military action, nuclear reaction
	Broad form - this includes loss as a result of fire, lightning, wind, smoke, hail, vandalism, sprinkler leakage, accidental discharge of water, collapse of building
	Basic form - most limited coverage of the three types of coverage

In the event of a loss of covered property, the payment of the policyholder will be valued based on:

	Guaranteed Replacement Cost - replacement cost with no limit and does not state a specific property limit
	Replacement Cost - payment for the loss is based on the actual replacement and may be limited to stated value
	Actual Cash Value - loss payments are based on the cost of new product, less depreciation and usage

A deductible will apply to the property insured in the association's policy.  The deductible could be on an occurrence basis, or could apply separately to each building or unit.  There may be different deductibles for the different covered property.  One aspect of the deductible to consider is how the deductible will be handled with the unit owner.  Unless the association documents specify who is responsible, the association or the unit owner, then the association should adopt a policy which describes the circumstances under which a unit owner would be responsible for paying the deductible.

It is important that the association Board and its management company understand the scope of the association coverages.  Homeowners should be advised on what is covered.  Even where the association covers improvements, alterations, fixtures and appliances within units, it is advisable for the homeowner to continue to carry coverage on their own separate policy.

Source: Association Times