The following coverages do not necessarily represent the entirety of available insurance products.
Provides coverage for water that backs up or overflows from a sewer, drain, or sump.
Claim Example: A clogged drain caused water back-up and damage to an association’s basement and equipment kept there.
A building limit is the maximum amount of money an insurance company will pay you for a covered loss. Reviewing your limit ensures you have sufficient coverage to rebuild or repair your property in the event of a total or partial loss.
Key reasons to review your building limit include:
Claim Example: An electrical fire caused fire, smoke, and water damage to units and common elements. Firefighters and first responders caused additional property damage as they gained access to the fire. The cost of repair and replacement materials has increased significantly since the association last reviewed their building limit. They found themselves underinsured and had to pay out of pocket for a portion of the repairs.
Provides coverage for additional expenses and costs due to a covered claim to meet the current building codes and government ordinances.
Claim Example: Approximately 50% of a building sustained damage from a fire. The city required the entire building to be torn down because they felt that the remaining portion was no longer structurally sound. Without Building Ordinance coverage, the building’s insurance only covered the damaged portion of the building.
Property that is owned by the association and used to maintain or service the building, structure, or its premises is covered under Building Coverage. Business Personal Property is separate from that and includes, but is not limited to, furniture, fixtures, and leased personal property for which you are contractually responsible to insure. This can include items such as lobby furniture or laundry equipment.
Business Personal Property can also refer to mobile equipment, which includes items such as Bobcats and forklifts, as well as other mobile pieces of equipment that aren’t intended for use on public roads and aren’t required to be licensed with the Department of Motor Vehicles.
Claim Example: There was a fire in an association, which destroyed several couches and tables in the building’s lobby.
A policy designed to provide protection against catastrophic losses. It provides higher limits of liability coverage if a settlement exceeds the limits of General Liability Insurance.
Claim Example: An individual slipped and fell on an insured’s premises, and it was deemed a ‘covered cause of loss’. This one slip and fall claim exceeded the association’s General Liability Occurrence limit of $1 million, so their Umbrella coverage was triggered to cover the excess amount.
The same applies when multiple claims incurred within a policy year exceed the General Liability Aggregate limit of $2 million. If this occurs and there is active Umbrella coverage, the Umbrella policy would respond.
Provides coverage for theft or misappropriation of funds, including employee dishonesty, forgery or alteration, on-premises, in-transit, computer fraud, and social engineering.
Employee Dishonesty covers theft or misappropriation of funds. Most financial institutions, whether for the association or its individual owners, require the association to maintain a minimum limit of three months’ maintenance. Additionally, the management firm is generally required to be considered an insured under the contract.
Forgery or Alteration covers losses resulting from forgery or alteration of the insured’s checks, drafts, and so forth. It does not cover losses resulting from the insurer’s acceptance of forged checks, drafts, and so forth of others.
On-Premises covers any type of unlawful taking of covered property to the deprivation of the insured while on the premises or a banking premises.
In Transit covers money & securities while in transit.
Computer Fraud covers loss of covered property due to the use of a computer to fraudulently transfer covered property to the wrongdoer.
Social Engineering provides coverage when money or personally identifiable information is voluntarily provided through manipulation, influence, or deception.
Covers an insured’s liability for a data breach in which personal information in their possession, such as Social Security numbers or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to either the electronic network or paper files.
Liability resulting from privacy and data breaches is increasingly emerging as a threat. Most General Liability, Directors & Officers Liability, or Fidelity Bond policies provide limited, if any, coverage. Co-ops and condominiums are particularly susceptible to cyberattacks due to the personal data that the board may store on residents and prospective buyers.
The potential financial consequences of a breach include, but are not limited to, lawsuits filed by compromised residents or buyers, the cost of credit monitoring required by law following a breach, and extensive forensic costs to determine the extent of the breach.
Claim Example: A board member received a phishing email they thought was from their property manager. They clicked on a fraudulent link and entered their ID and password, thinking they were logging into a legitimate site.
This then affected the association. The board member unknowingly gave a hacker a copy of their ID and password, which was then used to access prospective shareholders’ personal information, including applications and detailed financial information, including pay stubs, bank statements, and income tax returns, which were all compromised as a result.
Not only was the association responsible for the misuse of personally identifiable information and put the shareholders in cyber jeopardy, but they also had to pay ransom money to the hacker and additional costs for protecting shareholders with credit monitoring services or defending lawsuits due to the breach.
Liability coverage that protects directors or officers of a corporation from liability arising out of the performance of their professional duties on behalf of the corporation.
The lack of this coverage places the board at risk for many common suits lodged, such as:
Directors & Officers Liability also defends prior acts and non-monetary damages, and provides Duty to Defend Coverage. It includes directors, officers, committee members, volunteers, trustees, employees, and the association.
Claim Example: Unit owners in an association felt that their board of directors’ election was unfair based on racial discrimination. They filed a lawsuit against the board and property managers.
Provides coverage for damage resulting from earth movement.
Claim Example: A building was damaged due to a recorded earthquake.
A type of professional liability insurance that covers an insured in the event of a claim that may arise out of errors and/or omissions in the administration of a benefit plan, such as group health, dental, etc.
Claim Example: A new employee requested to receive medical insurance through the employer. The employer failed to add the new employee to the plan. As a result, the health insurance company later denied coverage for the employee’s medical claim.
Employee Benefits Liability coverage would pay for the benefits that would have been payable under the health insurance plan but for the employer’s error. This coverage applies to a wide range of employee benefits, including health, life, and disability insurance, retirement plans, and other benefits offered through employer-administered plans.
Liability insurance for employers that provides coverage for wrongful termination, discrimination, or sexual harassment of the insured’s current or former employees. Coverage can sometimes be endorsed to cover independent contractors who file suit as well.
Claim Example: A former building employee brought allegations of employee discrimination and harassment when she claimed she was fired after management discovered she was pregnant.
Also known as Systems Breakdown or Boiler & Machinery
Protects against breakdowns caused by power surges, motor burnout, boiler malfunction, and operator error. It provides for mechanical and electrical equipment, computers and communication equipment, air conditioning, refrigeration systems, boilers, and pressure equipment.
Coverage can pay for:
• The cost of repairing the damaged equipment
• Costs associated with the time and labor to repair or replace the equipment
• Business Income losses when a covered breakdown causes a partial or total business interruption
• Other expenses incurred to limit loss or speed restoration
• The cost to replace spoiled stock or materials
Claim Example: An association’s boiler was leaking due to an unknown cause. Equipment Breakdown covered the repairs to get the boiler back up and running.
Errors and Omissions Liability Insurance (E&O) is a type of specialized liability protection that covers losses not typically covered by traditional liability insurance. It provides liability coverage for a professional or quasi-professional insured to persons who have sustained a loss due to omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts committed during the course of business.
Claim Example: Management declined coverages, a claim occurred, and the building didn’t have the proper limits/coverage.
Provides excess D&O coverage for the board for the decisions they make in the event the primary D&O limits are exhausted.
If your current Excess Liability/Umbrella policy does not provide excess coverage over the D&O policy, we highly suggest binding this coverage.
Claim Example: A community association board entertained bids from companies to waterproof the deck around their pool. The contract was worth approximately $120,000. ABC Company submitted the lowest bid and was informed that the work would need to be started within three months and completed within two weeks.
ABC Company purchased a performance bond, blocked off the necessary time, and, in doing so, refused to take on other jobs. The board was having other work done around the pool and encountered problems. A week before ABC Company was to begin work, the board notified them that they couldn’t start, and it might be another three months before they could come to the site. ABC Company sued the board for breach of contract.
The association’s D&O policy limit was exhausted by a discrimination claim earlier that year, so their Excess D&O was used to cover this claim from ABC Company.
Provides coverage for damage resulting from heavy rain, overflowing bodies of water, storm surges, blocked drainage systems, and even rapid snowmelt.
The association is typically responsible for insuring it’s structure and common areas—lobbies, roofs, elevators, foundations, and shared mechanical systems. A flood in these areas can lead to massive repair costs that affect all owners if not insured. Flood insurance covers the cost of cleanup, damaged stock, and helps get things up and running again.
Flooding is a peril not typically covered under standard property insurance policies, especially when the property is in a high-risk flood zone.
Claim Example: An unexpected summer storm caused heavy rainfall, which led to the flooding of an associations basement and lobby. The flooring, furniture, and tools stored in these areas all had to be replaced.
Covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees).
Claim Example: An employee of an association was using their personal vehicle to run business errands, such as going to the bank, and got into an accident. Hired & Non-Owned Auto Liability covered the damage to the other car and any injuries to its occupants. It did not cover the employee’s vehicle or injuries to its occupants, as this fell under the employee’s personal car insurance policy.
If any person is doing association work on behalf of the association, designated by the association, then coverage would be provided if they were injured while doing the association work.
Even if an Association has no employees, it can still have workers’ compensation liability exposure. In a recent decision, the Court of Appeals held that an Association and its managing agent were both liable to pay workers’ compensation benefits to an injured worker employed by an uninsured and unlicensed contractor.
Claim Examples:
Designed to cover claims arising from pollution released at, on, or emanating from a specific scheduled location.
Claims for seepage or leakage of pollutants can cost hundreds of thousands of dollars to clean up and can be excluded from virtually all standard Property and Liability policies. An Environmental policy provides coverage for various pollutants, including, but not limited to, mold, asbestos, legionella, and lead-based paint.
Claim Example: A few years after construction of an upscale apartment community, tenants complained about mold in bathrooms. Multiple buildings and units within the complex experienced similar problems over the next few months. Some tenants moved out and filed claims for alleged bodily injury and property damage. An extensive investigation revealed that construction defects associated with HVAC systems and showers caused severe water intrusion and moisture build-up, leading to widespread mold growth. Damages to the property owner included loss of rent, cleanup costs, and settlements with injured tenants, totaling over $2 million.
Pays a percentage of an employee’s salary if they become temporarily disabled due to sickness or injury not related to their job.
It is required in most states if there are any employees on the payroll.
Claim Example: The property manager of an association needed time off from work to recover from pregnancy complications.
Protects from the significant financial and environmental consequences of leaks or spills from storage tanks, both above-ground and underground.
Claims for seepage or leakage of pollutants can cost hundreds of thousands of dollars to clean up and can be excluded from virtually all standard Property and Liability policies. Buildings with fuel tanks are particularly susceptible.
An Environmental policy covers:
Claim Example: A building’s underground storage tank leaked fuel into the soil and groundwater, resulting in a claim for cleanup expenses and legal action from nearby residents.
Provides coverage for defense costs and losses incurred in administrative charges and lawsuits brought by current, prospective, or former tenants alleging discrimination.
Property Owners have an exposure to claims where a tenant, former tenant, or applicant for tenancy alleges discrimination based on race, age, sex, nationality, or religion. This “Tenant Discrimination” exposure is usually not covered in commercial General Liability or Employment Practices Liability insurance policies.
Coverage highlights include:
Claim Example: A property owner refused to rent a unit to a potential tenant. The potential tenant felt they were being discriminated against due to a disability and sued the property owner.
A separate, higher deductible provision that applies to loss caused by wind or hail. Often, the deductible is expressed as a percentage of the property’s value, rather than as a flat dollar amount, as a percentage of the dwelling limit.
Wind and hail are covered perils under property policies and are covered up to the building limit. A Wind Deductible Buyback Policy would reduce the wind and hail deductible to a lower amount, especially if the association is located in a coastal area.
Claim Example: High winds caused damage to the roofing shingles at an association, which ultimately caused water intrusion and water damage to several units and common areas.
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