At the San Antonio, TX Community Association Law Seminar staying on top of the latest legal developments to better serve our #community #association clients!
Where is O’Connor Insurance?
Improvements, Updates, and Renovations can Change Your Insurance
Our homeowner and condominium owner clients take great pride in their homes and communities. All over our region, they make investments in the beauty and livability of their respective homes. When you make a renovation or an update to your home, do you check with your insurance agent?
Improvements Can Lower Premiums – Making changes to your home that reduce the chances of damage and loss can change how much you pay in premiums. Your choice of roofing may lower the risk of wind damage. Updating electric may lower the chance of fire. Plumbing updates can work to prevent flooding. Many carriers offer discounts for security systems. These can all be factors for the rates you pay for insurance.
Increasing Your Home’s Value – If your home improvements have substantially raised the value of your home, it is prudent to have your insurance agent review your coverage. That new kitchen, new addition or wonderful home theater should be covered just like the older features of your home.
When reviewing your coverage, consider the difference in the cost of actually restoring your home may have gone up (see our blog Insurance and Replacement Cost) and your coverage should reflect that. Our team at O’Connor Insurance Agency recommends periodic review of your coverage so that you know your family will be made whole should there be a loss.
Your independent insurance agents at the O’Connor Insurance Agency are interested in helping you get the best value for the coverage you need. Please contact one of our independent insurance agents at 314-434-0038.
Are You Covered If a Drone Crashes On Your Property?
Your maintenance associate has a great idea. Instead of climbing up and down ladders to inspect the roof and gutters after a storm, they’ll use a drone to take high-definition video of the peaks, valleys, hips and flashing of the buildings in your community association.
On a bright day, the sound of the drone buzzes like a giant, furious wasp. It takes off and your team is on your way to getting all the roofs inspected in record time. Toward the end of the afternoon, the last building is being inspected – the clubhouse. All is well until an unexpected breeze throws the drone off-course and it crashes through the massive window that faces the lake.
Will this accident be covered by your insurance?
In most situations the answer is “no.” For insurance purposes, an accident with a drone is no different than an accident with an aircraft. Unless you have coverage specific for aviation, the damage would not be insured.
Drone Liabilities – As drones are being employed for inspections, monitoring and other tasks for community associations, boards will want to take into account the possible problems that can come into play using flying drones. The obvious are accidents with a drone, or accidents caused by a drone, but the potential for liability does not end there. Drones likely to be used by a community association will be recording images. Combining images, video and data that may be personally identifiable can raise privacy issues as well as privacy liability. Even as aviation-related damage and injuries may not be covered under common policies, any cyber-security or privacy liability coverage will not extend to drone use. Should you employ drones, checking to make sure your policy includes coverage for cyber security and privacy is a good idea.
If a homeowner has an accident with their drone, the community generally will not be liable unless the community is somehow negligent. A possible step to avoid the charge of negligence could be for communities to establish “no drone zones.” That said, the Federal Aviation Administration regards regulation of the skies their exclusive purview, so a community association may not be able to enforce such a restriction.
Like any new technology, there are risks that offset the benefits. Community association leaders should speak with their insurance and legal representatives to develop a drone use policy and secure coverage for drone use.
If you have questions about insurance and drones, please call your independent insurance agent here at the O’Connor Insurance Agency. Our number is 314-434-0038.
Improving Your Community? Make Sure Your Insurance Keeps Pace!
Repairs and updates to your community association facilities change the insurance needs for that association. Some improvements can save you premium dollars, while others might increase your need for liability or replacement.
Expanding your Board? Check your Directors and Officers Coverage – D&O insurance protects those community association volunteer leaders who serve as trustees or board members. If your community is growing, and you add new members, your coverage needs may change.
Updates and Upgrades to Existing Features Can Affect Premiums/Coverage Needs – Updating your community pool? Renovating the clubhouse? Changes to the structures can both increase the need of coverage and even lower premiums. As it is with homeowner’s or unit owner’s insurance, increasing the value of the property may increase the coverage needed. The good news is improvements that reduce the risk of damage, such as a new roof or updated wiring, may yield premium discounts. A community association should have a thorough review of the changes in the community with their insurance agent.
Liability Changes – A community is liable for events on the property. Any community association ought to have an umbrella policy that will cover the community should someone be injured or worse.
Adding features, such as a playground, walking paths, or even a fountain will likely change how much liability coverage you will need. As with property improvements, adding security lights or improving roads and sidewalks may lead to premium discounts.
Tell Your Agent – Community associations should stay in close contact with their insurance agent. That agent should be made aware of changes in your association that could affect how your community is covered. A detailed account of improvements and changes will go a long way to making sure your community has the proper coverage at the best value.
If you would like to explore your coverage – identifying gaps and potential cost savings – contact the independent agents of the O’Connor Insurance Agency. You can reach us at 314-434-0038.
Prevent Roof Leaks By Preventing Ice Dams
The icicles that hang from the edge of your roof may be pretty, but they could also be an indication of a serious problem with the roof of your building. Ice dams form at or near the edge of roof decks when melting snow and ice collect and refreeze. This in turn can prevent melt water from flowing into gutters and away from the building. An ice dam can instead direct water up under the roof covering. The insidious flow of water may not be visible until the moisture has lead to rot, mold or worse and can cause a lot of damage.
The most common cause of ice dams is a roof that is too “warm.” Inadequate insulation allows heat from the structure to warm up the roof deck, causing a trickle of melted snow and ice to flow and re-freeze where the roof is cold. Clogged gutters or damaged roofing, such as loose shingles, can contribute to the formation of an ice dam.
Fixing an ice dam after it is formed can be dangerous to both persons and property. Large chunks of ice falling from overhead can cause serious injury or death. Using blunt instruments to break up ice can cause substantial damage to your roof. Employing ice melt chemicals can be effective, but some forms are corrosive and can cause damage to painted surfaces, concrete, plants and pets. When dealing with an existing ice dam, employ a great deal of caution, or better yet, get the help of a qualified professional.
The best cure for an ice dam is prevention. Consider having a contractor examine your roof and attic space for adequate insulation and look for various places where heat may be escaping. Many companies will perform an energy audit and can identify exactly where heat is escaping. Keeping your heat inside living and working spaces has the added benefit of saving your energy dollars.
Other solutions include adding heat tapes to the edge of roofs. This keeps the edge of your roof warm enough so that ice does not form. The obvious downside is the additional use of energy, but in some cases this is the most viable solution.
Criminal Minds
By Karen O’Connor Corrigan, CIC, CIRMS
Is your community association properly protecting its funds against theft? Today’s newspapers are riddled with stories of trusted property managers and board members embezzling large sums of money over long periods of time. Do not be the victim of a false sense of security just because your community has Fidelity coverage. Community associations are non-profit organizations governed by volunteers, therefore they need unique coverages. Take a closer look at your Fidelity policy.
This type of insurance was created for businesses, which have employees. Most community associations do not have employees. Therefore, you should be sure your Fidelity policy is endorsed to cover dishonest acts by your non-compensated board members. An association often outsources the community management or accounting functions. In that case, the policy must be modified to protect against theft by that company’s employees.
The following is a checklist to make sure your community association has the appropriate coverage to protect their funds.
Employee Theft is a confusing term for community associations since they typically do not have employees. Yet, this coverage is essential to protect the funds from dishonest acts by first parties who are known to have access. This coverage should be endorsed to cover the association’s:
- Board Members
- Committee Members
- Property Manager
Accounting Service i.e. City and Village Tax Office
Forgery or Alteration of your checks of your own checks by third parties such as someone stealing your check from the mail, and then cashing it.
Computer Fraud is for a third party that uses a computer to obtain money from your account. An example is a third party using a computer to create imitation checks in your name.
Funds Transfer is needed by all communities to protect against others impersonating you to manipulate your funds. The person could assume the board member or manager’s identity to make a transfer through computer hacking or other means. Imagine a person using the transit number at the bottom of your checks to make telephone purchases.
True Tales of Twisted Minds
Unfortunately, fraud, embezzlement, and theft are more common than we may realize. These are just a few cases where the trust was broken:
- St. Peters on-site manager accused of embezzling over $250,000 over several years. $80,000 was stolen via falsified checks and credit card payments. The Board was not suspicious until a change in accounting software was made.
- Chapel Hill Estates in Town & Country lost more than $50,000 over 2 years to their Treasurer.
- Fall Creek Condominium in Branson Missouri employed an on-site manager from May 2011 to September 2012, during which time the manager allegedly issued multiple checks, transferred funds, created cashier’s checks in her name, and made deposits into her personal bank account or her company bank account called, “ME.” The allegations exceed $300,000.
- Maryland House Condominium in the central west end had a bookkeeper who pleaded guilty after being accused of embezzling more than $70,000 over a 2 year period.
- $109,000 was stolen from a condominium in the DeBaliviere place neighborhood. A volunteer diverted association money for his personal expenses over 2 years.
- For over a decade, the President of Doral Manor Condominium in west county converted over $300,000 in association fees to his own use.
- Two owners of a property management company stole over $2 million from multiple communities to pay off a debt on a real estate project.
- $1.3 million stolen from 12 community associations by management company VP to keep management company from bankruptcy.
- A management company had over 400 communities. Over 2 years, the owner embezzled over $2.2 million by transferring the funds to himself or to a business in which he had financial interest.
Is Ice Melt Safe for Pets?
With any winter storm, homeowners and condo owners have to deal with snow and ice on parking lots, driveways and sidewalks. For most homeowners and condo associations, chemical ice melt is used to keep sidewalks clear. Many residents in our communities have pets. Is the ice melt you or your community association are using safe for pets?
Traditional ice melt is not much more than chunky table salt. In small amounts, it is relatively non-toxic. However, a pet that likes the taste of salt may lick it enough to get sick. Walking on ice melt can cause injury too. Salt chunks can be sharp, and these can cause painful injuries to the paws of our pet friends, not to mention salt in the wounds!
Further, salt also can dry out the soft pads of your pet’s paws. Dried out skin can crack and become painful or even infected. The various formulations of ice melt are going to pose different hazards, from chemical burns to potential poisoning. Fortunately, there are pet-safe ice melt formulas available. Morton Salt makes “Safe-T-Pet.” Petco carries Pestell’s “Paw Thaw” and True Value stores carry “Safe Pet” ice melter. Most major retailers will have some sort of pet-friendly ice melt.
If your community is using a lot of ice melt, a few tips can help your pet on their walks.
- Massage some petroleum jelly onto the pads of their paws before going out – this will help with the cold and afford protection from salt.
- Keep a towel handy to occasionally wipe their paws clean of any debris.
- If your pets will wear them, booties can protect their paws from the elements.
- Watch your pet when out for exercise and prevent them from consuming any of these chemicals.
We at O’Connor Insurance love our pets, and we hope yours are able to enjoy the winter months free of illness. If you have any questions about insurance matters pertaining to ice and snow on your property, or the property managed by your community association, please contact one of our independent insurance agents at 314-434-0038.
Did You Budget For A Change In Weather?
The Insurance Information Institute posted $1.5 billion in insured losses so far this year due to the near-record snowfall and prolonged extreme cold weather throughout much of the United States. There have been more than 175,000 claims paid for losses such as burst pipes from freezing, ice dams on roofs, roof collapses, downed tree limbs and power lines. Still, the premium increases seem harsh to unsuspecting community associations.
Condominium and attached-home Master Insurance Policies have been taking big premium hits at renewal due to severe weather in our area – going back to before the Joplin tornado.
Weather across the nation has been severe this past winter with the Polar Vortex, and claim costs continue to rise. Insurance companies have paid out millions to replace roofs at just one association, which in turn affects pricing for other community associations.
That is what insurance is for, right? Not in our neighboring states. Just look west to Kansas and Oklahoma, where there are 1-2% Wind and Hail deductibles, where roof claims are settled on the depreciated value of the roofs rather than replacement cost. This might hit Missouri at some point, but right now the premiums seem to be the punishment for our storms.
On the bright side, most detached home subdivisions will not have to worry about large premium increases because they do not have much property to insure, other than a clubhouse or monument. However, the owners may have noticed higher individual homeowner premiums for the past three years.
Solutions are often sought by shopping for a lower-price insurance company. There are occasions when a better premium can be found, but be certain it is apples to apples comparable coverage with a quality insurance company. It is not the Board’s fiduciary responsibility to save money at the loss of protection.
Often, there is no good solution to offset premium increases. Associations shop their Master Policies only to find there is no other insurance company offering a better price for the same coverage. This means many Associations will breach their budgets.
While avoiding insurance premium increases altogether is most likely impossible, there are practices that can help.
A higher deductible will lower the premium and also serve to avoid small nuisance claims which could increase the premium next year. Proactive initiatives such as obtaining reserve studies and adhering to the results creates a well-maintained association. Roof replacement schedules will keep the structures sound and more resilient to the storms.
Have you considered the hail-resistant roofing systems? They cost about 20% more up front, but look down the road at the potential high wind and hail deductibles.
Understand that your original budget may not have anticipated the events that will impact pricing in 2014 and beyond. An additional assessment of your prior budget may leave you better prepared for pricing and deductible increases that may result from historically high property damage and resulting claim costs.
Five Expensive Insurance Mistakes and How Community Associations Can Avoid Them
Consider these five insurance tips to keep your community association out of trouble:
 |
No Umbrella Policy For When It Rains Liability A recent case in Florida found that untrimmed shrubbery led to a tragic accident. The jury awarded $12 million to the plaintiffs. Without an umbrella liability policy, such a judgement would bankrupt a community association. |
 |
The Untrustworthy Trustee In Missouri, a woman was indicted for stealing $300,000 over the course of many years from the community association that placed its trust in her. Without adequate fidelity insurance, the association would never be able to recover those lost resources. |
 |
Common Structures and Features Need Property Insurance Too A car actually drove into the pool of one of our associations, causing a great deal of damage. Fortunately, the loss was covered – thanks to property insurance that covered structures and features like fountains, streetlights, gazebos, paved walking trails and, in this case, the community pool. |
 |
When the Lawyers Are Swinging Hammers, Directors and Officers are Nails Directors and officers of community associations need protection in the event of a court conflict. Even an innocent board member can lose money and time in a lawsuit. Directors and officers insurance covers the legal fees for board members should they ever be summoned to court. |
 |
Our Residents Were Expecting the Whole Clubhouse to be Replaced, not 60% Too often, community associations are only insured for the market value or the depreciated value of their property, not the full replacement value. A-20-year-old clubhouse may cost $150,000 to replace, but if it is only insured for $90,000, the balance has to be paid by the association. Should this happen, residents may have to be assessed, and will blame the trustees for inadequate coverage. |
After an Accident in your Community
There’s been a serious accident on the common property – someone falls, a pedestrian is hit by a cyclist, or (as in the case of one of our clients) someone drives a car into the community pool. What do you do after you call 911?
Losses due to accidents differ from those caused by storms, floods or other “acts of God” in that there is a possibility of civil liability. One cannot sue the Almighty, but one can sue a community association if there was a broken railing on a gazebo.
The authorities only investigate for criminal liability. The fire department will certainly look for signs of arson after a fire, but they are finished as soon as the smoke clears and are satisfied no crime was committed. The same is true with other kinds of accidents. In many cases, there is no evidence collected beyond a written report where an officer essentially writes “nothing to see here.”
Insurance companies employ skilled investigators who look into incidents such as these to collect evidence and testimonies. They will visit the accident scene to take photos and gather interviews. This is important, because without evidence, a court will have little to go on other than the testimony of those involved.
Having evidence protects both the community association and the person who was injured. Insurance exists to make people whole. The insurance companies we do business with are fair and more than willing to cover genuine losses. On the other hand, having a solid body of evidence can keep people out of court as the photos and testimony collected by investigators can help those involved in a claim recognize where liability truly lies.
When there is an accident, and once everyone is safe, call your insurance agent and tell them what happened. Do not hesitate to call our office, we will make sure the interests of everyone are protected and will work with you to determine the next steps.
