auto insurance norwell MA gordon atlantic insurance homeowners insurance norwell MA gordon atlantic life insurance norwell MA gordon atlantic boat insurance norwell ma gordon atlantic business insurance norwell ma gordon atlantic
             Auto Insurance          Home Insurance           Life Insurance           Boat Insurance      Business Insurance

    Commercial Insurance Blog

    What is a Waiver of Subrogation?

    Posted by Geoffrey Gordon

    Thu, Jun 07, 2018 @ 03:57 PM

    In one of our previous blogs, What is an Additional Insured?, we discussed additional insureds in contracting.   When subcontractors work for general contractors they need to show that they carry their own insurance so if something goes wrong, and sub’s insurance company will ultimately be paying first.   The GC will ask be an 'Additional Insured' to get coverage under the sub’s insurance program.   In addition, the general contractor will often require a 'Waiver of Subrogation' clause.  This waiver gives up rights of the subcontractor insurance program, so usually comes with a cost.  This is classic Contractual Risk Transfer at work.

    conditions-624911__340

    Often required by larger, mopre sophisticated contractors, the Waiver of Subrogation shifts costs on any event entirely to the subcontrtactor: regardless of fault.   Suppose an electrical subcontractor hired by a GC is hurt on a job site due to negligence of the hiring contractor.  Without a waiver in place, the worker's compensation company will demand reimbursement through the general contractor’s liability insurance in a process called Subrogation.  

    If a Waiver of Subrogation is in place, the electrician's insurer agrees NOT go after the GC's insurance, even if he's negligent, completely at fault.  The worker's compensation claim goes entirely on the electrician’s insurance history, increasing  the experience modification factor, and thus their future costs.   Nothing fair about that.

    But the general contractor has shifted that risk off his own program, onto the subcontractor's, in a tactic known broadly as contractual risk transfer.  Because your insurance company knows it can't recover against a responsible party, they commonly charge more when granted.   

    For a video on the topic that appears in BusinessTown, click to watch:.

    If you have a question regarding your own personal insurance circumstances, please call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form to the left of this blog for a return phone call or email.

    For other pertinent commercial insurance topics, check out our commercial insurance blog


    Geoff Gordon

    INSURANCE QUESTION?

    Tags: construction, commercial, insurance, Business, contractors, insurance waiver, waiver, subrogation, additional, insured, certificate

    Workers Compensation Audit Compliance

    Posted by Geoffrey Gordon

    Fri, May 11, 2018 @ 12:19 PM

    Your Workers Compensation insurance renews and you receive the letter informing you it's time for the prior term's audit.  

    Initial premium is based on estimated payroll.  At the end of the year the company needs to determine actual payroll, including casual labor and uninsured subcontractors. If the actual is less than the estimate you get a refund.  If the actual is greater than the estimate, you owe the difference. 
     
    Business Man Pic
    When you purchase Workers Compensation insurance, part of the agreement is they may audit your payroll to be sure it's accurate.  It may be a phone audit, a self-audit, or a physical on-site audit, (physical is required in Massachusetts at least every three years).

    Should you refuse, it's rough: the carrier issues a high "estimate" with premium due. If you do not pay the estimated additional, your policy gets cancelled and the Department of Industrial Accidents may issue a Stop Work Order. You may also have an uninsured loss and then have to pay for medical expenses and lost wages out of pocket, plus be subject to a fine.  

    To prepare for the audit try to have:

    • Payroll records
    • Federal 941 Tax Returns (most recent four quarters)
    • 1099 Tax Forms 
    • Federal Tax Return including Profit & Loss section (1040 Schedule C, etc.)
    • General ledger or checkbook
    • Certificates of Insurance from subcontractors

    You will receive a Final Audit Report from the carrier.  If money is owed and you disagree you can file a dispute. The payment due date will be suspended until the dispute is settled.  

    Here's a chalkboard video that summarizes all this:

     

     

    To discuss your Workers Compensation coverage with a Gordon Atlantic Insurance professional, call us toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form at the top left of this blog for a return phone call or email.

    Geoff Gordon

    INSURANCE QUESTION?

    Tags: commercial, workers compensation, insurance, Business, insurance audit, audit

    Massachusetts Potentially a Hotbed for New Marijuana Markets

    Posted by Jeff Helm

    Thu, Apr 05, 2018 @ 02:11 PM

     According to marijuana.com, there is a great deal of interest developing in the newly emerging Massachusetts Recreational Marijuana market.  Reportedly there are over 200 applications already in process for consideration by the Commonwealth's Cannabis Control Commission through their website

    Cannabis Pic

    Operators of medical dispensary operations that wish to expand into the recreational sales area may have priority certifications, having already passed through the stringent approval process.  Those with priority certification applied for licenses through April 16, 2018.  

    Applications for retail or cultivation licensing will be accepted later this spring. 

    Commercial sale of recreational marijuana in the state is expected to begin on July 1st following the initiative approved by voters in November of 2016.

    One of the business challenges in this new industry is paying for things.  Because marijuana is still a federally controlled substance, banks operating across state lines are severely limited in whom they can do business with.  This poses a risk of holding cash, especially large amounts of cash.  This challenge is felt along the entire vertical: growing, distributing, right down to retail sales.  Talk to Gordon Atlantic experts about ways to manage this risk, including insurance options.  

    To discuss risk management strategies for your business, including insurance, please call me toll free at (800) 649-3252.  Prefer to type versus talk?  Click below!

     
     HAVE A QUESTION?
     
     Jeff Helm Web Card A 2018-5
     
     

    Tags: commercial, insurance, Business, marijuana

    Can Changing Your Legal Entity Status Affect Your Insurance?

    Posted by Geoffrey Gordon

    Fri, Jul 28, 2017 @ 11:16 AM

    Know how your legal entity status affects your commercial business insurance policy with andrew gordon incChanging the legal entity type of your business can affect your insurance, but changes affect different lines differently.  For most kinds of insurance, carriers will usually change the “named insured”  based on a request from the customer, provided there are no material changes in the scope of the operation.  If there are changes in the operation, such as change in management, ownership, or strategic direction, then a new policy is usually underwritten and rewritten. 

    Workers Compensation is one kind of insurance greatly affected, however. A change from proprietorship to corporation, or corporation to LLC, will result in material changes to this particular insurance line as the premium charged is a direct function of payroll.  In particular, owners’ payroll is fixed statutorily and differs for proprietorship, corporations, LLC's and partnerships. 

    Because the payroll amount of compensation in a corporation can be managed through distributions, deductions to qualified plans and other accounting practices, Workers Compensation assigns a minimum payroll of $10,920 and maximum of $55,120 annually for officers (with >25% ownership). Thus a corporate officer taking no payroll (and living only on distributions) will still be charged as though his or her payroll was $10,400.  Conversely, a corporate officer making $500,000 a year is capped at $52,000. Although included officers are automatically subject to this payroll floor and ceiling, owners with 25% or greater ownership may opt out. 

    Proprietorship is different. Unlike corporations where corporate officers are included by default, proprietorship excludes owners by default. As with the option of corporate officer opt-out, proprietors may opt in. When this is the case, their payroll is statutorily set at $47,000 (as of October 2017 and subject to change). Partners in partnerships and members in LLC's are treated the same as proprietors for Workers Compensation purposes; they are excluded by default but may opt in.

    Why opt in? The most important reason is you’re covered! If you get hurt at work the policy will pay medical expenses and lost wages. Why opt out? To keep workers compensation costs low.

    Some contractors will require that their subcontractors include owners on their workers comp insurance policy. The purpose of this is to prevent payments to these contractors from being charged to the general contractor’s payroll. To make the distinction clear, Certificates of workers compensation insurance usually state in the comments section whether owners are included or excluded.  

    Businesses are dynamic and changes to corporate structure are one of many changes that businesses experience. If you are contemplating a change in business entity structure, have your attorney and your insurance agent or risk partner collaborate on how this might affect your risk and insurance program. To discuss your situation, call one of the professionals at Gordon Atlantic Insurance toll free at 800-649-3252.  Prefer to type instead of talk?  Submit your question below.

     

     HAVE A QUESTION?
     
    Geoff Gordon

    Tags: commercial, comp, workers, compensation, legal, insurance, Business, proprietorship, entity, status

    Business Owners: Consider Google

    Posted by Gordon Atlantic Insurance

    Sun, Jan 22, 2017 @ 09:00 AM

    As social media engineer, I spend most of my time on the internet where I run into lots of great tools. Lately, I’ve become a bit of a Google addict. Now, most computer users are familiar with Google’s incredible search engine, but are unaware of the whole host of formidably effective tools that Google offers FREE. Google’s innovations have been so useful to me; I decided to write about them.

    Business owners should operate with google and commercial insurance from andrew gordon inc

    Google Chrome:

    I’ll start with the big guy. Most PC users use Internet Explorer for web browsing …I’m so sorry. As someone who dealt with the frustrations of IE for many years before switching to Firefox and then Chrome, I can highly recommend Chrome as a replacement. Google Chrome is lightweight, offers fast web browsing that works seamlessly with Google applications and offers applications for download. It also feels incredibly intuitive to use; you could download it today and wouldn’t notice a huge difference from Internet Explorer, but deal without whatever problems and bugs are plaguing the latest version of IE.

    Google Documents:

    My personal favorite. The idea is that you can store and edit your documents through Google, which is incredibly useful for business:

    • The documents can be retrieved from any computer with internet, and can be categorized into folders like your documents on your hard drive.
    • Where Gdocs hit it out of the park is with sharing your documents. You can choose to give anyone else with a Google Account rights to view and/or edit your document. You can even have multiple people working on a document AT THE SAME TIME. For real.
    • You can save documents in a wide variety of formats, including PDF or HTML
    • You can upload your Microsoft Word documents straight to Google Docs
    • Let’s say you’re working on a group project, and after editing a document for weeks, you decide your version that you had last month was better. Good thing GDocs allows you to access the complete revision history of the document, and recall it from any of its previous stages
    • Everything that I said above also works with PowerPoint presentations and Excel spreadsheets that you’re familiar with in Excel are available for use in Google though their spreadsheet function.

    Google Calendar:

    Another incredible feature. You can create an online calendar of your tasks and events, which can also be shared with anyone else with a Google Account. You can also create several color coded calendars to organize your events. It can even send you notifications through email or to your smartphone. I’ve used Google Calendar to organize my life for about a year now. When someone asks me for my availability, I just email them a screenshot of my week, print out a copy for their desk, or share it with them directly. I can even choose to only share my work schedule with them so they don’t know that I marked the Mythbusters marathon for watching!

    gmail good for businesses, wikipediaGoogle Mail:

    I’m not going to spend any time raving about Google Mail, but I would urge you to at least check it out. It’s just as great as the other tools and just as free.

     

    Google Reader:

    For those of you who manually check your favorite blogs and websites, join the 21st century and open a Google reader account. You can add the RSS feeds of your favorite blogs and websites and receive all your updates in one user-friendly application. I used to read the newspaper, but now read my news feed. It’s like my own customizable news feed from my favorite columnists, authors, and bloggers.

    Google+:

    This is Google’s new social media system, still in beta. Getting an invite is tough right now, but if you’re in, you’ll notice that it’s an upscale, cleaner Facebook. Instead of having 768 friends that see everything you do, you put your friends into circles then publish each post only to the circles that you select. This is so my family doesn’t have to see my school-related posts, and effectively eliminates the awkward 60-year-old-aunt-flora-commenting-on-every-status-you-post syndrome. Facebook does offer these tools as well, but they’re little used and frankly, Google just does it better. Google plus also offers group video chat and the ability to separate your news streams by your circles which is refreshing. Again, Facebook does offer a similar service, but it takes some headache to put in place. G+ also includes a feature called Google Sparks, which partners with Google’s search engine to match your interests with random content from the internet that it thinks you’ll like; it’s usually right. Basically, while it still has some catching on to do, Google plus represents a cleaner version of Facebook paired with the brute functionality of Skype and the addictive nature of StumbleUpon. If you can, check out Google plus.

    What’s really cool is that if you choose to use all of these Google services, you can manage almost everything important though Google. I rarely have to open external programs anymore. Google does it all.

    Tip of the Hat,

    CF

     

    Corbin Foucart. Andrew G. Gordon Insurance

    INSURANCE QUESTION?

    Tags: commercial, gmail, Google, chrome, calendar, plus, documents, docs, bussineses, consider, insurance, Business

    Business Fleets: How GPS Technology can Lower your Costs

    Posted by Gordon Atlantic Insurance

    Fri, Jan 20, 2017 @ 09:42 AM

    Keep track of your companys cars with commercial insurance from andrew gordon incWouldn’t it be great if you could watch your entire fleet of vehicles from 20,000 feet in the air? You could verify that workers are where they say they are, make sure they aren’t speeding, stop extensive idling, help a dispatcher identify location during urgent calls, or even find the most efficient route for a company vehicle to travel during a job.

    Well, technology that used to be affordable only for big corporations is now not only available but economical for fleets as small as five vehicles, right here in the Boston area.

    We recently saw a demonstration from Boston Global Tracking, a new local business dedicated to helping other businesses keep track of their vehicles. We don’t have any kind of interest in this company other than liking what they do, so our endorsement is based entirely on what we’ve seen, and how we think it can help you control your fleet.

    The simplicity behind the technology is ingenious. The same GPS that many drivers already use to find directions can be monitored through the internet at any given time, providing you not only with precise vehicular location, but also with information like speed and trip information. Furthermore, improvements in GPS technology allow the devices to be implanted in the key of a company car, which eliminates any possibility of tampering.

    This kind of a system often results in behavioral change without even having to discipline anyone. The value of better driving and fewer accidents are impossible to specifically quantify, but control over other things outlined above (such as eliminating lengthy idling), are.

    For a quote on your auto fleet, click here:

    Business Quote

     

    For answers to any of your insurance questions, click here to get a quick response from one of our insurance professionals:

    HAVE A QUESTION?

    Corbin Foucart

    Tags: commercial, insurance, Business, Boston, fleet, gps, global tracking, driving

    What is a Package Policy?

    Posted by Geoffrey Gordon

    Mon, Aug 08, 2016 @ 04:33 PM

    Success_Starts_Here_Freeway_Style_Desert_Landscape.jpgA Package Policy is a type of insurance policy that usually includes more than one kind of insurance coverage. The most common Package Policy combines property coverage, such as for buildings or business contents, with liability coverage, such as premises liability or product liability.

    One advantage to packaging coverages is the cost. When a single company can provide coverage for several lines of business, such as property, liability, business income and so forth, they can offer pricing considerations.

    A Businessowners Policy (BOP) is the most common and broadest type of Package Policy, but other package policies comprise the majority of commercial insurance programs when more than one line of insurance is written by the same insurance company.

    For example, a company with no property except a marine and liability exposure could have a Package Policy covering those two lines. A Package Policy may be used when the business doesn't qualify for a BOP.

    Two coverages included in a BOP that might need to be priced specifically are business income and product liability. For example, many restaurants use a Package Policy because the product liability - food poisoning or choking – needs to be specifically rated.

    Similarly some businesses have such large business income and extra expense needs that this coverage also needs to be rated specifically. 

    The advantage to a non-BOP Package Policy is that you only need to purchase coverage relevant to your needs. A Businessowners Policy includes many coverages that may not be relevant to your exposure, or could be necessary but reflect unanticipated needs.

    Certain lines are very rarely included under a Package Policy, most commonly Workers Compensation and Automobile or Fleet insurance.  These generally stay as separate policies because of their highly regulated nature and their disparate underwriting considerations.

    To find out more about what which Package Policy is right for you, call the insurance professionals at Gordon Atlantic toll free at (800) 649-3252.  Prefer to type instead of talk?  Click below.

    HAVE A QUESTION?

     

    Tags: commercial, BOP, insurance, business owner policy, commercial package policy, CPP, package policy

    What is a BOP?

    Posted by Geoffrey Gordon

    Fri, Jul 29, 2016 @ 01:52 PM

    A BOP is an acronym for Business Owners Policy and is a good, simple solution for many small businesses’ core property and liability insurance needs.

    Small Biz Pic.jpg

    A typical BOP has three primary sections:

    1. Property coverage for your business property such as furniture, stock and inventory.

    2. Liability coverage in case you are sued or your product hurts somebody.

    3. And Business Income coverage if your business is damaged such that it cannot operate for a period of time. This coverage will cover lost income including payroll and profits.

    A Business Owners Policy is the insurance industry's answer to small businesses inspired by the Homeowners Policy that most people use to insure their homes.  Just as a homeowners policy is considered a “package” of disparate coverages (i.e. financial protection for the home; its contents; liability coverage including defense; and a rental to live in if the house cannot be occupied), the BOP works the same way but for businesses.  It is also a package of a variety of protections as bulleted above, and can include the building if it is owned by you.

    Insurance carriers typically "throw in" a variety of additional coverages that may or may not apply to your particular business.  It is more cost effective for them to do this versus adding on and pricing a la carte.  When comparing quotes or policies, focus on those lines that apply to YOUR operations.

    The BOP is a good starting point to manage risk, but it does not do everything.  For example, Employment Practices Liability is excluded.  Given the growth in claims for discrimination and wrongful termination, this coverage can either be added to a BOP or purchased separately.  Similarly, liability arising out of a data breach or other cyber attacks are normally not included in a BOP.  Ask for this line to be quoted and endorsed on to the BOP if appropriate and available.  Naturally the BOP does not include many specialty coverages as such as Pollution, Directors & Officers, Flood and other more specific needs.

    A BOP should be written in concert with your Workers Compensation coverage, which protects employees when they are hurt on the job, and/or your Business Auto insurance, also always handled separately.

    With a nod to what's not included, by itself and when eligible the BOP is truly a well-priced and broad solution for many businesses.

    To discuss your business exposure and needs, and to see if a BOP is right for you, call the insurance professionals at Gordon Atlantic toll free at (800) 649-3252.  Wish to type instead of talk?  Click below for an answer or a quote.

    HAVE A QUESTION?

    REQUEST A QUOTE 

    Geoff.jpg

    To find out more about what we can do for you, CALL US at (781) 659-2262, Get a Quote,
    Or follow us on any of our social media pages.

    Tags: commercial, owners, policy, insurance, Business

    Massachusetts Workforce Training Fund Program – Improving Employee Productivity

    Posted by Val Feeney

    Mon, Feb 03, 2014 @ 10:34 AM


    If you haven't heard of the Workforce Training Fund you're not alone. This is one of the best kept open secrets in Massachusetts. Part of the unemployment compensation tax every employer in Massachusetts pays goes directly into the Workforce Training Fund programs (with the unfortunate acronym:  the WTF Program). The money in this fund - averaging about $21 million per year - is not available to legislators for other civic uses and often runs a surplus. The program provides matching money to employers for employee training. If your business is committed to continuing education and workplace skills development this fund will reimburse you for half your expenses. It's a great way to enhance employee productivity, and is about as close to free money for Massachusetts employers as you'll see anywhere.

    Improve employee productivity in your business with commerical from andrew gordon inc insurance

    There are several versions, but if you're reading about this for the first time consider the simplest to be The Express Program. The Express Program is for employers with less than 100 employees and there are over 2,000 training programs to choose from. The overview page is linked here. To see if you qualify click the qualifications page located here; most small business employers do qualify. Next, select a course that's appropriate for your business needs.  All courses listed have been approved by the state so they already meet due diligence requirements. The training course search also allows you to delineate location, industry, cost, and other useful criteria.

    The Express Program took us about a month of fairly tedious form submissions and follow ups, but proved well worth the effort. For example, one step asks for your DUA number as though it's your Social Security number or Federal Tax ID number (it's your unemployment insurance number as it appears on your unemployment insurance notices). The second time around obviously goes more smoothly because you know what to expect. 

    Once a course is selected you then apply for official acceptance...the fun part referenced above. You will schedule and pay for the program in full per the terms of the training sponsor selected, then the WTF Program will reimburse you its half upon completion of the course. This ensures that you have some skin in the game and are committed to the course’s completion. In our office we have enrolled more than half our staff, including five customer service reps and our manager, in a client development training program. This program focuses on listening skills, understanding personality styles, and offers other tips useful for any front line service staff. Dedicated sales people are continuing with a follow up program which focuses on the later stages of the sales process. We are committed to engaging more staff in additional programs later in the year. The returns in productivity and customer satisfaction from the first program, at this writing only half completed, are already noticeable.

    Increase employee productivity with commerical business insurance from andrew gordon inc

    Other employers we network or do business with have successfully taken courses in time management, customer service, team building, and other areas that small businesses generally don’t have the resources to create, plan and execute internally. Consider it outsourcing non-core, but useful, business skills....with your unemployment tax paying for half. It's a pretty good deal!

    The General Program is for the big dogs:  larger companies that can dedicate resources toward completing the more lengthy and complicated grant approval process, and that are looking for much larger payoffs. While the General Program provides full reimbursement for the training costs, companies must demonstrate that they are kicking in 50% of the overall cost, which may include labor and fringe benefits.

    Improve productivity in your business with commercial insurance from andrew gordon inc

    The staff at the Department of Workforce Development tells you that this process takes about 60 days, but given the complexity of what's required, plan for more time or engage a professional. The General Program requires that you calculate and show the return on investment, and document how the company's own resources match the grant amount. You may include wages of all participants plus 20% for fringe benefits while participating in training, the time cost of writing the grant, and so forth. But even though it is not as easy as the program folks may tell you, many companies are awarded high 5- and 6-figure grants.  If the training program is a good match for your company's needs, showing a return on investment of other people’s money should be attractive.

    Finally there is a Hiring Incentive grant: hire someone who was unemployed and receive up to $5,000. We have not used this program yet, so will not comment further here.

    Overall, this is state assistance, paid for already through your unemployment taxes.  It offers a broad range of training programs to enhance your company's human capital, which is often the greatest asset of a business. Reduce the risk to this valuable asset (such as with turnover or stagnation) by investing in its improvement. Why would you NOT take advantage of developing it for shared employer/employee success?

    If you wish to discuss further with an insurance professional at Gordon Atlantic Insurance, please call us toll free at (800) 649-3252. Prefer to type versus talk?  Click below!

    HAVE A QUESTION?

     

     

    Tags: commercial, employee, productivity, training, unemployment, subsidized, express, program, insurance, Business, ma

    Condo Master Policy Insurance

    Posted by Geoffrey Gordon

    Tue, Apr 23, 2013 @ 08:01 AM

    Get a condo master policy with andrew gordon inc insurance

    Condominium insurance is a unique kind of insurance that integrates the interests of a condominium association with the interests of the individual unit owners. Even though each unit owner has a proportional interest in the association, unit owners do have distinct and separate interests from those of the association.

    Because insurance usually follows ownership, the ownership boundary between what the association owns and the unit owner owns is an important detail. Ownership is normally defined in the Master Deed.  Here are two broad categories that we see today.

     

    All-in

    The condominium structure commonly known as "all-in" includes everything right to the interior coat of paint inside the condominium units.  This “all-in” approach typically will include additions or alterations that a unit owner makes, such as adding new cabinets, alarm system, chandeliers, and so forth, provided the unit owner alerts the Association to these additional values. The Association is then responsible for providing insurance for everything that is permanently attached within the condominium structure. A  simple way of visualizing this concept is to imagine picking up and turning the whole building upside down, and shaking it.  Everything that falls out, such as furniture and other personal property, is the responsibility of the unit owner. Everything that stays attached to the structure is insured by the association policy. 

    Bare walls 

    The “bare walls” approach means the bare walls of the building, and leaves a greater responsibility on individual unit owners to insure their portion of the “structure,”  In the Master Deed, the “bare walls” approach uses wording such as “on the plane of the interior studs,” or “the plane of the lower side of the roof rafters,” or ”the top surface of the sub-flooring.”  This means that the unit owner owns -  and is responsible for - the drywall, wallpaper, paint, ceiling, flooring, and should insure these items on their own unit-owner policy (known in insurance lingo as an HO-6).   Even bathtubs, toilets, sinks, kitchen cabinets and counter-tops may not be covered by the association's insurance.

    Remember, insurance usually follows ownership. Under "bare walls, the association insures only the shell structure plus common mechanicals such as heating systems, common plumbing, and common electrical; the rest is the unit owner’s responsibility.

    Master deeds aren't always written on a 100% "all-in" vs 100% "bare-walls" basis. Often there are shades of gray. Some master deeds with an all-in basis exclude betterments & improvements (e.g., upgraded lighting fixtures or cabinetry would not be covered).

     

    The bare-walls to all-in endorsement.

    Many insurance carriers now offer a work-around to an association with a 'bare-walls' master deed who want all-in coverage: an endorsement that says, forget who owns what, we (the insurance company) agree to insure the building(s) on an "all-in" basis.  The amount of insurance will be higher because they're insuring all those interior walls, and there may be a charge for the endorsement as well, but this is a good solution if most unit owners don't want the responsibility of insuring the interior walls, ceilings and floors of their units with their own insurance.

    The downside is that more claims will accrue to the association policy.  Being commercial insurance,this insurance is much more sensitive to claims history.  A few claims will drive up the cost of insurance for the whole association substantially.  

     

    Possible problems where the association policy intersects with personal policies:

    The biggest insurance problems occur when there is a master deed and insurance that calls for "bare walls" insurance, but unit owners do not know that it is their responsibility to insure their portion of the building individually.  When this happens and there is damage to interior walls, such as water damage from storms or plumbing problems in upper floors, there is no insurance in either policy for the interior walls. Depending upon the size and build within individual units, this can be significant value that unit owners self-insure by default, without even knowing.

    Another problem occurs when a condominium association insures its building based on a “bare walls” replacement estimate, but the deed calls for “all-in” coverage. The result is severely underinsured values.   Valuations for “bare walls” condo buildings typically run 30 to 40% less than valuations for similar sized "all-in" policies because of the cost of finish work and interior walls. Imagine if you were handed the keys to your newly rebuilt unit, only to find rough plywood floors, studs for walls, and only joists for a ceiling.   Review your master deed for ownership specifics, or work with a broker like Gordon Atlantic Insurance who can help plan around these things.
     
      
    Management of the association can directly affect the cost of insurance, as attention to general conditions and safety concerns affect potential losses.  Because every association is managed uniquely, and because attention to these details affects losses over the long run, insurance underwriters pay close attention to loss history with condominiums.  Unit owners prefer to have an association assume condominium losses, rather than file their own claims; just as condos associations prefer to have unit owners insurance pay claims..  So, even though insurance generally follows ownership, there may be pressure to have associations assume losses. 
     
    Because of these issues, we usually recommend associations use high deductibles, self-insuring smaller losses to avoid these losses from affecting insurance claims experience.  When associations have more skin in the game, attention to loss prevention is heightened, lowering the long term cost of risk.  With condo associations greater than four units, insurance companies usually will want to review condominium association financials to ensure the ability to pay for these smaller claims.  
     
    Even when claims experience is good, insurance company initial inspection is rigorous. Talk to us about conditions before the insurance inspector shows up.  The most attractive pricing is reserved for the best-maintained (perfect) places.
     
    See our other blogs and whiteboard videos for more on how individual unit owners can address their interests as they may deviate from association interests and association management’s lack of understanding of some of these nuances.

    If you have any further questions, contact us by clicking the buttons below.

    Contact Us

    Geoff Gordon

    Tags: commercial, policy, insurance, Business, condo, homeowners, master, deed

    Latest Posts

    Most Popular Posts

    Have a Question?