THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, July 8, 1995 TAG: 9507060293
SECTION: REAL ESTATE WEEKLY PAGE: 08 EDITION: FINAL
COLUMN: Common Ground
SOURCE: G. Robert Kirkland and Michael A. Inman
LENGTH: Medium: 68 lines
I have been made the chairman of the committee for selecting our insurance provider. This led me to examine my condo association's insurance policy.
Can you give me tips for making sure that we get what we really need? What do I need for my own policy?
There are several principles to help you examine the policies, says Roy Beskin of Beskin & Associates, a Virginia Beach insurance agency. First, the master association policy should include these liability coverages:
Commercial general liability coverage, which should be at least $1 million.
Directors and officers liability of at least $1 million. This insures the board of directors against suits and damages from their actions as board members. Though state law protects volunteer directors on association boards, the board can still incur legal expenses. If a director is sued, such coverage will pay the defense cost.
Umbrella, or blanket excess, coverage, which adds an extra layer of liability insurance. It is usually written in increments of $1 million.
Non-owned and hired automobile coverage, which protects the association against suits when an employee or officer is operating a personal or leased vehicle on association business.
Other coverage should include:
Full replacement cost for all real and personal property maintained by the association. This generally covers not only your unit as the developer delivered it at closing, but also the buildings and other common elements.
What is covered is dictated in large part by the provisions of your declaration and the manner in which it defines ``units'' and ``common elements.''
The amount of coverage needs to be enough to rebuild or repair the buildings at the time of loss. A qualified appraiser or contractor can determine that amount, which should be calculated on replacement cost, not sales price.
An employee-dishonesty bond, which covers the association for the loss of money or property as a result of employee theft. Officers are considered employees under this coverage.
The amount of coverage should be at least equal to the association's funds on hand. This should include all checking, savings and money market accounts.
Workers compensation is required for associations with three or more employees. The coverage depends on the amount of the yearly payroll. Workers comp is optional but recommended for associations with fewer employees.
Your personal association homeowners policy is designed to pick up where the master policy leaves off. It's important to review the coverage you might require. This may include coverage for personal contents, improvements, personal liability, special assessments and business pursuits.
You may even need specific coverage for jewelry, artwork or antiques.
For more information, consult an insurance agent who has worked with condominiums. If you find gaps in your insurance, plug the holes as quickly as possible. The financial risk of not doing so is too high. MEMO: G. Robert Kirkland, president of a Virginia Beach property management
consulting firm, and attorney Michael A. Inman specialize in Virginia
community association issues and are affiliated with the Southeastern
Virginia chapter of the Community Associations Institute. Send comments
and questions to them at P.O. Box 446, Virginia Beach, Va. 23458. To
submit questions by phone, call 430-3617; by fax: 431-0410. by CNB