CONDOMINIUM COVERAGES

The following is a general description of various condominium related insurance coverages, as well as a link to statute 718.111:  Click Here

PROPERTY INSURANCE Property/Casualty: Covers damage to or loss of policy holder’s property and legal liability for damages caused to other people or their property. Property/casualty insurance, which includes auto, homeowners and commercial insurance, is one segment of the insurance industry. Some coverage items to be aware of with property insurance are.

Difference In Conditions (DIC) insurance provides coverage designed to close specific gaps in standard insurance policies and is usually available only for larger industrial or commercial risks. It allows coverage to be customized to extend to such exposures as water damage, flood, collapse, earthquake, landslide, etc., according to the insured’s needs. DIC coverage may be provided by means of a separate insurance policy or it may be added by endorsement to the basic policy.

Basic Form Perils versus Special Form Perils.  A “peril” is defined as a cause of damage or loss. To be covered for damage or loss under a “basic ” contract, the damage or loss must be caused by a peril that is “named” or listed in the contract. Consequently, if damage or loss is caused by a peril that is not named, there is no coverage. In addition, the contract’s exclusions must also be considered in determining coverage.   In a “special ” contract, it is not necessary to name or list the insured perils since the intent is to cover all risk of damage or loss. Here, too, the contact’s exclusions must be considered; however, the “special ” form of coverage provides a much greater coverage quality. Note that “special ” coverage should not be construed to mean “all loss” coverage. Certain types of loss are definite and therefore not insurable.

Replacement Cost. This form of insurance provides coverage on the basis of full replacement cost without deduction for depreciation on any loss sustained, subject to the terms of the co-insurance clause. This coverage applies to both building and contents items as specified on the face of the policy.         No deduction is taken for depreciation in arriving at the proper amount of insurance needed to comply with the co-insurance clause.

Co-insurance.  Co-insurance is an arrangement by which the insured, in consideration of a reduced rate, agrees to carry an amount of insurance equal to a percentage of the total value of the property insured. An example is if you have guaranteed to carry insurance up to 80% or 90% of the value of your building and/or contents, whatever the case may be. If you don’t, the company pays claims only in proportion to the amount of coverage you do carry. For a more detailed explanation, please speak with your agent.

COMMERCIAL/GENERAL LIABILITY         Under this form of insurance and regarding a covered occurrence, the company will pay all sums the insured becomes legally obligated to pay as damages due to:         1. Bodily Injury (Coverage A)         2. Property Damage (Coverage B)         The insurance company has the right to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of suit are groundless, false or fraudulent, and to make such investigation and settlement of any claim or suit as it deems expedient. However, the company is not obligated to pay any claim or judgment or to defend any suit after applicable limit of the company’s liability has been exhausted by payments of judgments or settlements. Non-Owned  Auto Liability coverage is for policies written with limits of liability of $1 million or more. It provides additional coverage for board members and volunteer’s personal auto liability policies and is placed on top of or in addition to those persons underlying limits. It can only be triggered when the board member or volunteer is doing something for or on behalf of the association.

DIRECTORS AND OFFICERS LIABILITY In today’s litigious society, the savvy nonprofit entity recognizes the need for D&O liability coverage. These are the facts:

  • Nonprofit organizations are not immune from costly litigation.
  • Nonprofit organizations are being sued more often and from more sources, despite laws in most states that limit the liability of nonprofit directors and officers.
  • Employment related suits for such things as harassment and wrongful termination are at an all-time high, especially since enactment of the Civil Rights Act of 1991 and the Americans With Disabilities Act of 1992.
  • Directors and officers are subject to the duties of diligence, obedience, and loyalty and can be sued for negligence in the performance of those duties.
  • A claim could threaten the personal assets of directors, officers, and trustees.
  • The financial burden of defending a D&O suit can drain a nonprofit organization’s badly needed resources.

Who Sues Nonprofit Organizations? Almost any day to day decision or action by anyone in the organization can trigger a lawsuit. Of all the lawsuits brought against nonprofit organizations, more than 50% involve employees. Even with the most diligent efforts to prevent employment disputes, the following claims can and are often alleged against nonprofit organizations:

  • Discrimination due to race, sex, age, national origin, religion, disability, or sexual orientation
  • Wrongful termination
  • Sexual harassment
  • Promotions and compensation
  • Interference with employment contract
  • Hiring decisions
  • Conflicts of interest
  • Libel, slander, and defamation of character
  • Failure to supervise employees
  • Invasion of privacy
  • Copyright infringement, misrepresentation of ideas, and unauthorized use of logos

Coverage is available that defends against all of those allegations and more, including claims brought by:

  • Donors who feel that their contributions have not been used to further the expressed aim of the organization.
  • Board members who disagree with a majority decision on the use of funds.
  • Beneficiaries who feel they are entitled to more than they received.
  • State attorney generals who institute legal proceedings against the board for issues such as mismanagement of funds and antitrust violations.

UMBRELLA LIABILITY           This type of liability insurance provides excess liability protection. Your business needs this coverage for the following three reasons:

  • It provides excess coverage over the “underlying” liability insurance you carry.
  • It provides coverage for all other liability exposures, excepting a few specifically excluded exposures. This is subject to a large deductible of $10,000.
  • It provides automatic replacement coverage for underlying policies that have been reduced or exhausted by loss.

FIDELITY BOND/CRIME           Fidelity Bond coverage protects an insured from financial loss due to the fraudulent activities of one or more board members or employees. The coverage includes protection for loss of money, securities, and other property of the insured.           Some scheduled policies are still available, but the majority are written on a blanket basis. This provides coverage for all employees, subject to the policy definitions.         The limit of liability is “per loss” and is applied on an “occurrence” basis. All acts involving the same employee or group of employees is considered one occurrence.

PROPERTY MANAGEMENT ERRORS AND OMISSIONS LIABILITY (“MISTAKE LIABILITY”) COVERAGE           Coverage Type
1. Liability — Pays on your behalf all sums you become legally obligated to pay by reason of any act, error, or omission rising out of services you render or failed to render. Such services include arranging for property maintenance, renting or leasing, construction, alteration, land development, etc.
2. Defense and Settlement — Pays for defense of any claim or suit that is the subject of this insurance.
Examples

  • Mishandling of accounting and financial matters
  • Mismanagement
  • Exceeding authority under the contract
  • Failure to perform under the contract
  • Failure to obtain certificates of insurance from contractors for Workers’ Compensation insurance, resulting in owner being liable for the premiums
  • Giving incorrect property values, resulting in uninsured losses or excessive premiums
  • Failure to maintain an adequate amount of insurance
  • Important Coverage Feature
  • Intentional acts of employees (current and/or terminated) are covered.