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7 Ways Associations Can Manage Risk Associated With Insurance
With increases in insurance costs many associations are looking for ways to reduce claims thereby reducing insurance costs. The best way to approach claims reduction is by better managing the risks. This can be done through resolutions, document amendments and policies of the board. The checklist below provides 7 ways that associations can manage risk.
Providing specific provisions regarding owner insurance obligations is the first step. Every owner should know what they are responsible for insuring, the type of insurance needed and the risks to them if they do not carry the necessary insurance. An association may also want to identify high risk areas in the community and adopt policies regarding their inspection, repair and replacement by either owners or the association. Perhaps most importantly, associations should adopt insurance guidelines that set out a process for allocation of deductibles and how claims will be filed and processed.
1. Maintenance & Insurance Chart
Provide easy to understand chart of owner/association maintenance and insurance responsibilities by specific components
HOW: Chart/List
COST: Approximately $1,900
2. Owner Fact Sheet
Provide owners with fact sheet as to their insurance obligations
HOW: Fact Sheet in Welcome Packet or newsletter
COST: $0
3. Insurance Guidelines
Advise owners of how insurance deductibles will be allocated, claims filed and processed, and insurance obligations
HOW: Resolution
COST: $895
4. Right to Inspect/Repair High Risk Components
Grant the Association the authority to inspect, repair, replace high risk components inside a unit to minimize claims caused by those components
HOW: Amend Declaration
COST: $395
5. Require Owner Insurance
Require owners to carry certain types/amounts of insurance
HOW: Amend Declaration
COST: $295
6. Strict Liability Provision
Make owners strictly liable for any damages cause if they originate from their unit
HOW: Amend Declaration
COST: $295
7. Mold Resolution
Grant the Association the authority to inspect, repair, replace high risk components inside a unit to minimize claims caused by those components
HOW: Resolution
COST: $295
Any of our attorneys would be happy to speak with you further about the 7 ways to manage risk associated with insurance to identify those that would work best for your association.
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Upcoming Classes:
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Community Associations Institute
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The Community Associations Institute (CAI) is a nonprofit organization that provides education and resources to community associations. To find out more about CAI visit www.caionline.org
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