In June of this year, the nation was left shocked by the sudden collapse of a condo building in Surfside, FL. The tragic event left nearly 100 people dead and millions of people questioning how this could have happened. After it was revealed that the collapse was likely due to over four decades of overdue repairs and structural damage, many turned their scrutiny toward the condo and homeowner association boards tasked with upholding these maintenance requirements.
Prioritizing a building’s maintenance repairs benefits everyone. Tenants can rest easy knowing they are safe from any damages caused by overdue repairs or structural damage and homeowners association boards can be confident their property values are increasing and their risks are decreasing.
So how can insurance professionals help?
As an independent agent, there are steps you can take to help manage risk for your board of director clients.
Step 1: Review current liability coverages
One of the easiest ways to help your board of directors clients mitigate risk is by reviewing their current liability coverages to identify any gaps. Most associations will have adequate property, general liability, and D&O coverages, but may be missing out on other crucial coverage such as:
Crime and Fidelity
Crime and fidelity insurance protects a board of directors from any costs incurred in the event of embezzlement or fraud.
Sometimes, general liability insurance isn’t enough to protect against unforeseen losses. In these instances, umbrella insurance can help a board of directors cover excess costs.
Workers compensation coverage can provide security when a board of directors uses a service provider who is not insured, without being aware of it. Workers compensation can also provide coverage to volunteers and board members who get injured on the job.
In addition, depending on the property location(s) agents should talk with clients about whether flood, earthquake, or hurricane insurance could be right for them.
Step 2: Encourage preventative measures
Detecting a maintenance or structural issue early can save your client a significant amount of work and money down the line and prevent avoidable tragedies. Discuss the measures your client is currently taking to assess the structural integrity of their property. Help your client be proactive in assessing and addressing building upkeep by encouraging them to take the following preventative measures:
Conduct a Reserve Study
The main purpose of a reserve study is to provide a board of directors with a financial plan for allocating reserved funds. Conducting a reserved study can help your client determine how well they are currently keeping up with general property upkeep as well as the board’s ability to cover damage costs in case of emergencies.
Perform a Property Assessment
While many states now require homeowners associations to conduct periodic structural assessments, many still have no such requirements. If your client is not required to perform property assessments, encourage them to do so anyway. By periodically evaluating a building’s structural integrity, you can address areas in need of maintenance before they lead to more serious issues.
Agents should remind clients that these preventative measures are not a one-time thing. Reserve studies and property assessments should be conducted on a regular basis to ensure no preventable damages or injuries occur. A structural engineer can help your client best determine how often these measures need to be taken.
Step 3: Advocate for transparency
Lack of transparency from homeowners associations can cause tenants to lose their trust, their money, and in extreme cases like the collapse of the Surfside condo, their lives. It is critical that these associations keep property tenants informed of any building needs and potential costs – no matter how big or small. Encourage your client to remain transparent with their property tenants about any structural damages or other maintenance needs as well as their plan to address them.
As an experienced insurance agent, you know a lot about mitigating risk. If your board of directors clients are feeling uncertain about their ability to manage their property risks, let them know that you are here to help. By working closely with your board of directors clients to review coverages, encourage preventative measures, and advocate for transparency you can help them feel more confident, save money, and most importantly avoid tragedies big or small.