INSURANCE PRIMER FOR ASSOCIATIONS Scott F. McLaughlin, CIC, CRM, CIRMS CAU, Inc. Office: 800-228-1930 Ext. 7182 Cell: 480-215-2927 Email: [email protected].

INSURANCE PRIMER INSURANCE PRIMER FOR ASSOCIATIONSFOR ASSOCIATIONS

Scott F. McLaughlin, CIC, CRM, CIRMSScott F. McLaughlin, CIC, CRM, CIRMS

CAU, Inc.CAU, Inc.

Office: 800-228-1930 Ext. 7182Office: 800-228-1930 Ext. 7182

Cell: 480-215-2927Cell: 480-215-2927

Email: [email protected]: [email protected]

HOW TO BEGINHOW TO BEGINStep one in an analysis of your insurance program will include a Step one in an analysis of your insurance program will include a review of legal and lender requirements:review of legal and lender requirements:

1.1. Know what state statues require. Some states, such as Arizona, require Know what state statues require. Some states, such as Arizona, require that property coverage for buildings include the developer’s original that property coverage for buildings include the developer’s original specifications. This policy form is known as ‘single entity’specifications. This policy form is known as ‘single entity’

2.2. Review your association’s governing document requirements. Are there Review your association’s governing document requirements. Are there specific requirements for liability limits? Is boiler and machinery coverage specific requirements for liability limits? Is boiler and machinery coverage required? Is a waiver of subrogation against unit owners required? Failure required? Is a waiver of subrogation against unit owners required? Failure to be in compliance with the Association’s governing document to be in compliance with the Association’s governing document requirements could be construed as a breach of fiduciary responsibility by requirements could be construed as a breach of fiduciary responsibility by the board of directors. the board of directors. Remember: the CC&R’s are a legal contract Remember: the CC&R’s are a legal contract between the Association and the unit owner.between the Association and the unit owner.

3.3. Be familiar with guidelines of lenders such as FNMA. Specific guidelines Be familiar with guidelines of lenders such as FNMA. Specific guidelines include those for property and fidelity bond or employee dishonesty include those for property and fidelity bond or employee dishonesty coverage.coverage.

A review of policies and coverage forms will begin with the master A review of policies and coverage forms will begin with the master package policy. This policy can provide a full range of property and liability package policy. This policy can provide a full range of property and liability insurance as well as other coverage parts like boiler and machinery, insurance as well as other coverage parts like boiler and machinery, employee dishonesty, crime, directors and officers liability and others.employee dishonesty, crime, directors and officers liability and others.

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PROPERTY COVERAGE FORMPROPERTY COVERAGE FORM

BARE WALLSBARE WALLS Provides coverage for common Provides coverage for common

and limited common elements. and limited common elements.

It excludes property within the It excludes property within the

Unfinished interior surface of the Unfinished interior surface of the

perimeter walls, floors and ceilings of units or privateperimeter walls, floors and ceilings of units or private

storage areas, additions, alterations and structuralstorage areas, additions, alterations and structural

repairs, finishes, coatings and coverings of walls, floorsrepairs, finishes, coatings and coverings of walls, floors

and ceilings, and permanently installed appliances andand ceilings, and permanently installed appliances and

fixturesfixtures

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SINGLE ENTITYSINGLE ENTITY Provides for common Provides for common

elements, limited common elements, limited common

elements, and property elements, and property

included in units and privateincluded in units and private

storage areas which were initially installed instorage areas which were initially installed in

accordance with the association’s original plansaccordance with the association’s original plans

and specifications or a replacement of like kindand specifications or a replacement of like kind

and quality.and quality.44


ALL INALL IN Provides coverage forProvides coverage for

common elements, common elements,

limited common elements, property limited common elements, property

included in units and included in units and

private storage areas and additions,private storage areas and additions,

betterments and improvements made at thebetterments and improvements made at the

expense of a unit ownerexpense of a unit owner

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VALUATION OF LOSSVALUATION OF LOSS

REPLACEMENT COST (RC)REPLACEMENT COST (RC)Allows for recovery of a loss on the basis of actual Allows for recovery of a loss on the basis of actual replacement without regard for depreciation. Property replacement without regard for depreciation. Property values are considered on the basis of new for old, values are considered on the basis of new for old, subject to a specific policy limit.subject to a specific policy limit.

ACTUAL CASH VALUE (ACV)ACTUAL CASH VALUE (ACV)Allows for recovery of a loss on the basis of actual Allows for recovery of a loss on the basis of actual replacement minus depreciation. replacement minus depreciation.

GUARANTEED REPLACEMENT COST (GRC)GUARANTEED REPLACEMENT COST (GRC)Allows for replacement cost with no limit. The coverage Allows for replacement cost with no limit. The coverage form will not state a specific property limit and allows form will not state a specific property limit and allows recovery of a loss to be whatever the replacement cost is recovery of a loss to be whatever the replacement cost is at that time.at that time.

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VALUATION OF LOSSVALUATION OF LOSS

AGREED AMOUNT OR AGREED VALUEAGREED AMOUNT OR AGREED VALUECoverage which waives any coinsurance clause Coverage which waives any coinsurance clause in the insurance contract and eliminates the in the insurance contract and eliminates the possibility of a coinsurance penalty if property is possibility of a coinsurance penalty if property is not insured to value at the time of lossnot insured to value at the time of loss

INCREASED COST OF CONSTUCTIONINCREASED COST OF CONSTUCTIONAs a property ages, it will become subject to As a property ages, it will become subject to updated building codes. In the event of a loss, updated building codes. In the event of a loss, reconstruction may be required to meet current reconstruction may be required to meet current codes. codes. For example, a sprinkler system in a building or For example, a sprinkler system in a building or handicapped facilities in a restroom may be required for rebuilding.handicapped facilities in a restroom may be required for rebuilding.

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CAUSES OF LOSS COVEREDCAUSES OF LOSS COVERED

SPECIAL FORMSPECIAL FORM

This coverage form is also known as “all risk” and This coverage form is also known as “all risk” and provides protection for all perils except those specifically provides protection for all perils except those specifically excluded. While the special form is the broadest excluded. While the special form is the broadest available, there are many variations in perils excluded available, there are many variations in perils excluded such as: sewer backup, artificially generated electrical such as: sewer backup, artificially generated electrical current or mysterious disappearance for property of current or mysterious disappearance for property of others. Standard exclusions include flood, earth others. Standard exclusions include flood, earth movement, war and military action, nuclear reaction and movement, war and military action, nuclear reaction and material factors such as wear and tear, rust, corrosion, material factors such as wear and tear, rust, corrosion, deterioration, hidden or latent defects, settling, cracking, deterioration, hidden or latent defects, settling, cracking, bulging, shrinking or expanding.bulging, shrinking or expanding.

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CAUSES OF LOSS COVEREDCAUSES OF LOSS COVERED

CONTINGENT LIABILITY FROM BUILDING LAWSCONTINGENT LIABILITY FROM BUILDING LAWSTo understand this coverage, one must recall that the special form, To understand this coverage, one must recall that the special form, replacement cost policy will repair or replace those items damaged by the replacement cost policy will repair or replace those items damaged by the peril of fire, wind, lightning, etc. However, if a regulatory authority condemns peril of fire, wind, lightning, etc. However, if a regulatory authority condemns a whole building rather than allowing the repair or replacement of the a whole building rather than allowing the repair or replacement of the damaged portion of the building, the total building is lost. Contingent liability damaged portion of the building, the total building is lost. Contingent liability coverage is needed to rebuild the undamaged portion of the building while coverage is needed to rebuild the undamaged portion of the building while the standard policy form will rebuild the damaged portion of the buildingthe standard policy form will rebuild the damaged portion of the building..

DEMOLITION COSTSDEMOLITION COSTSWhen the Contingent Liability clause When the Contingent Liability clause

becomes operative, the undamaged portion becomes operative, the undamaged portion of the building must be razed before it can of the building must be razed before it can be rebuilt. Demolition cost coverage affords be rebuilt. Demolition cost coverage affords this protection.this protection.

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ITEMS OF PROPERTY COVEREDITEMS OF PROPERTY COVERED

BUILDINGSBUILDINGSCould include residences, club house, Could include residences, club house, meeting centers, boat houses, carports, meeting centers, boat houses, carports, garages, sewage treatment facilities, garages, sewage treatment facilities, and heating and air conditioning plants. and heating and air conditioning plants. Could also include foundations; pipes, wires, conduits, andCould also include foundations; pipes, wires, conduits, andutilities whether above or below ground; heating, ventilationutilities whether above or below ground; heating, ventilationand cooling systems; sprinkler, fire protection and securityand cooling systems; sprinkler, fire protection and securitysystems; permanently installed building machinery andsystems; permanently installed building machinery andequipment; balconies; porches; decks and patiosequipment; balconies; porches; decks and patios

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STRUCTURESSTRUCTURESCould include arbors, awnings Could include arbors, awnings or canopies, bridges, bulkheads, or canopies, bridges, bulkheads, cabanas, courts for handball, courts cabanas, courts for handball, courts for racquet sports, flagpoles, fences, for racquet sports, flagpoles, fences,

walkways, roadways, walkways, roadways, fountains, gatehouses, fountains, gatehouses, gazebos, piers, docks and gazebos, piers, docks and wharves, pump houses, wharves, pump houses, recreation fixtures, retaining recreation fixtures, retaining walls, walls, swimming pools and swimming pools and statues.statues.

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OTHER PROPERTYOTHER PROPERTY

Could include antennas and Could include antennas and

satellite dishes, electronic satellite dishes, electronic

data processing equipment data processing equipment

and software, fine arts, indoor and outdoorand software, fine arts, indoor and outdoor

furnishings, glass, personal effects, propertyfurnishings, glass, personal effects, property

of others, property off premises, signs, andof others, property off premises, signs, and

trees, plants and shrubs.trees, plants and shrubs.1212

ADDITIONAL PROPERTY COVEREDADDITIONAL PROPERTY COVERED

LOSS OF INCOMELOSS OF INCOMEProvides coverage to replace the lost income during the Provides coverage to replace the lost income during the period when damage to the premises or other property period when damage to the premises or other property prevent this income from being earned. For example: prevent this income from being earned. For example: loss of maintenance fees when a unit is damaged by fire.loss of maintenance fees when a unit is damaged by fire.

EXTRA EXPENSEEXTRA EXPENSEProvides coverage for the additionalProvides coverage for the additional

expenses needed to continue the expenses needed to continue the operation of the association following operation of the association following an insured loss. The expenses of a an insured loss. The expenses of a temporary office, phone lines and temporary office, phone lines and equipment rental would be an extra equipment rental would be an extra expense.expense. 1313

PRIMARY LIABILITY COVERAGEPRIMARY LIABILITY COVERAGE

Liability coverage insures against third party claims arisingLiability coverage insures against third party claims arisingform alleged bodily injury (BI) or property damage (PD) to membersform alleged bodily injury (BI) or property damage (PD) to membersof the publicof the public

The insurance company The insurance company has the duty to defend thehas the duty to defend theassociation against any association against any claim which alleges injury claim which alleges injury or seeks damages regardless ofor seeks damages regardless ofwhether the association is negligent. whether the association is negligent.

A comprehensive general form is preferred as it covers allA comprehensive general form is preferred as it covers alloptions of the Association and is not restricted to theoptions of the Association and is not restricted to theAssociations premises.Associations premises.

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PRIMARY LIABILITY COVERAGESPRIMARY LIABILITY COVERAGES

ADDITIONAL INSUREDSADDITIONAL INSUREDSProvides employees and property managers acting within the Provides employees and property managers acting within the scope of their duties the same liability protection afforded to the scope of their duties the same liability protection afforded to the associationassociation

ADVERTISING INJURYADVERTISING INJURYProtects the association against injury arising from advertising Protects the association against injury arising from advertising activities including slander, defamation of character or libelactivities including slander, defamation of character or libel

CONTRACTUAL LIABILITYCONTRACTUAL LIABILITYProvides coverage if the association has entered into any contracts Provides coverage if the association has entered into any contracts where it agrees to indemnify or hold harmless the other partywhere it agrees to indemnify or hold harmless the other party

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PRIMARY LIABILITY COVERAGESPRIMARY LIABILITY COVERAGES CROSS LIABLITYCROSS LIABLITY

Provides protection if an owner or member of the association sues Provides protection if an owner or member of the association sues the association for bodily injury damages occurring on a common the association for bodily injury damages occurring on a common area as a result of negligence by either a unit owner or the area as a result of negligence by either a unit owner or the associationassociation

GARAGEKEEPERS’ LEGAL LIABILITYGARAGEKEEPERS’ LEGAL LIABILITYProvides protection for the automobiles of unit owners or guests that Provides protection for the automobiles of unit owners or guests that are in the care, custody or control of the association, such as are in the care, custody or control of the association, such as attendants that park cars. Coverage is provided for such perils as attendants that park cars. Coverage is provided for such perils as collision, vandalism and theft.collision, vandalism and theft.

HOST LIQUOR LIABILITYHOST LIQUOR LIABILITYProvides coverage for liability that may arise if the association Provides coverage for liability that may arise if the association sponsors events where liquor is consumed or served.sponsors events where liquor is consumed or served.

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INDEPENDENT CONTRACTORS LIABILITYINDEPENDENT CONTRACTORS LIABILITY

Protects the association from loss due to liability arising from Protects the association from loss due to liability arising from operations of subcontractorsoperations of subcontractors

SEVERABILITY OF INTERESTSEVERABILITY OF INTEREST

Precludes the insurance company from denying liability because of Precludes the insurance company from denying liability because of negligent acts of the association or a unit ownernegligent acts of the association or a unit owner

MEDICAL PAYMENTSMEDICAL PAYMENTS

Provides coverage for medical expenses of Provides coverage for medical expenses of

members of the public injured on the common members of the public injured on the common property whether or not the association is liableproperty whether or not the association is liable

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PERSONAL INJURYPERSONAL INJURYExtends bodily injury to include false arrest, Extends bodily injury to include false arrest,

detention or imprisonment, malicious detention or imprisonment, malicious

prosecution, libel, slander, defamation of prosecution, libel, slander, defamation of

character, invasion of privacy, wrongful character, invasion of privacy, wrongful

eviction and wrongful entry. Some forms eviction and wrongful entry. Some forms

may also include coverage for humiliation and discrimination.may also include coverage for humiliation and discrimination.

PROPERTY DAMAGE LEGAL LIABILITYPROPERTY DAMAGE LEGAL LIABILITYProvides coverage for the association for property of others in the Provides coverage for the association for property of others in the association’s care, custody or control at the time of loss. Some association’s care, custody or control at the time of loss. Some forms limit coverage to the peril of fire only.forms limit coverage to the peril of fire only.

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LIABILITY LIMITSLIABILITY LIMITS OCCURRENCEOCCURRENCE

• An occurrence means an accident that results in An occurrence means an accident that results in injury or damage neither expected nor intended injury or damage neither expected nor intended from the standpoint of the insuredfrom the standpoint of the insured

GENERAL AGGREGATEGENERAL AGGREGATE• The general aggregate limit is the most the The general aggregate limit is the most the

insurance company will pay for any and all liability insurance company will pay for any and all liability occurrences or losses under the policy during any occurrences or losses under the policy during any one policy yearone policy year

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UMBRELLA POLICYUMBRELLA POLICYThe umbrella liability policy provides coverage in excess of general The umbrella liability policy provides coverage in excess of general or primary liability and other coverage’s which could include or primary liability and other coverage’s which could include automobile liability, employers liability (workers compensation) and automobile liability, employers liability (workers compensation) and directors and officers liability.directors and officers liability.

An umbrella policy becomes effective when primary or underlying An umbrella policy becomes effective when primary or underlying limits have been exhausted, or when a claim develops that is not limits have been exhausted, or when a claim develops that is not covered by primary insurance but is covered by the umbrella policy.covered by primary insurance but is covered by the umbrella policy.

It is important to distinguish the breadth of the umbrella coverage It is important to distinguish the breadth of the umbrella coverage form. It may be a excess form which is the same as the primary form. It may be a excess form which is the same as the primary coverage, it may be a following form type or it may be a form that is coverage, it may be a following form type or it may be a form that is broader than the primary policy.broader than the primary policy.

Determine whether defense costs are provided in addition to policy Determine whether defense costs are provided in addition to policy limits. Establish whether there is a self insured retention which limits. Establish whether there is a self insured retention which applies to coverage not included on the underlying or primary policy.applies to coverage not included on the underlying or primary policy.

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DIRECTORS AND OFFICERS DIRECTORS AND OFFICERS LIABILITYLIABILITY

Directors and Officers liability provides Directors and Officers liability provides protection against claims alleging loss protection against claims alleging loss

arising from arising from mismanagement or mismanagement or

wrongful acts.wrongful acts.

A wrongful act means any breach of duty, neglect, A wrongful act means any breach of duty, neglect, error, misstatement, misleading statement, omission error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the or other act done or wrongfully attempted by the association.association.

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SCOPE OF COVERAGESCOPE OF COVERAGE Claims Made FormClaims Made Form

Provides protection for claims made or presented to the insurance Provides protection for claims made or presented to the insurance company while the policy is in force, without regard to when the event company while the policy is in force, without regard to when the event occurred. Most policies today are written on a claims made basisoccurred. Most policies today are written on a claims made basis

Full Prior ActsFull Prior Acts Protection for losses which occurred before the policy inception on a Protection for losses which occurred before the policy inception on a

claims made coverage form. Full prior acts coverage eliminates a claims made coverage form. Full prior acts coverage eliminates a retroactive dateretroactive date

RetentionRetention Amount of claim payment for which the association is responsible. The Amount of claim payment for which the association is responsible. The

retention may be in addition to a policy deductibleretention may be in addition to a policy deductible Persons InsuredPersons Insured

Should include the association; directors and officers, past and present Should include the association; directors and officers, past and present (elected or appointed); employees; committee chairs and members; and (elected or appointed); employees; committee chairs and members; and other association members acting at board directionother association members acting at board direction

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HOW IT PAYSHOW IT PAYS Indemnity ContractIndemnity Contract

The insurance company will indemnify the association for any The insurance company will indemnify the association for any costs for which the association becomes legally liable. The costs for which the association becomes legally liable. The association is responsible for hiring and paying legal counsel association is responsible for hiring and paying legal counsel until indemnified by the insurance company. indemnification may until indemnified by the insurance company. indemnification may not occur until the claim is concluded.not occur until the claim is concluded.

Pay on behalf of contractPay on behalf of contract The insurance company will choose legal counsel, handle the The insurance company will choose legal counsel, handle the

claim, and pay any costs for which the association becomes claim, and pay any costs for which the association becomes legally liable including costs of the defense.legally liable including costs of the defense.

Defense CostsDefense Costs Determine whether defense costs are included in the policy limit Determine whether defense costs are included in the policy limit

or are paid in addition to the policy limit.or are paid in addition to the policy limit.2323


EXCLUSION REVIEWEXCLUSION REVIEW The coverage provided by directors and officers The coverage provided by directors and officers

liability forms varies greatly. The extent of liability forms varies greatly. The extent of coverage provided or not provided can be coverage provided or not provided can be determined by reviewing policy exclusions. determined by reviewing policy exclusions.

Those exclusions includeThose exclusions include:: Failure to maintain adequate insuranceFailure to maintain adequate insurance Injunctive Relief/Non-Monetary damages (Injunctive Relief/Non-Monetary damages (the most the most

common type of D&O claim today)common type of D&O claim today) Discrimination – illegalDiscrimination – illegal Wrongful TerminationWrongful Termination Sexual HarassmentSexual Harassment

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EMPLOYEE DISHONESTY EMPLOYEE DISHONESTY (FIDELITY BOND)(FIDELITY BOND)

Employee Dishonesty coverage Employee Dishonesty coverage indemnifies the association for loss of indemnifies the association for loss of

money, money, securities or any other property due to securities or any other property due to acts of acts of fraud, dishonesty, forgery, theft, larceny, fraud, dishonesty, forgery, theft, larceny,

embezzlement, wrongful abstraction, or willful embezzlement, wrongful abstraction, or willful misapplication or misappropriation or any misapplication or misappropriation or any criminal act.criminal act.

Coverage is provided only for the association’s employees, unless it isCoverage is provided only for the association’s employees, unless it isspecifically broadened. Directors and officers of the association andspecifically broadened. Directors and officers of the association andemployees of the property management firm who handle associationemployees of the property management firm who handle associationfunds should also be covered. Association documents and/or FNMAfunds should also be covered. Association documents and/or FNMAguidelines may specifically require that coverage be broadened.guidelines may specifically require that coverage be broadened.

2525

ADDITIONAL COVERAGESADDITIONAL COVERAGES

Additional policies or Additional policies or coverages coverages which the association’s which the association’s

exposures may require or exposures may require or desire desire include workers include workers compensation, employee benefits liability, boiler compensation, employee benefits liability, boiler and machinery coverage and automobile and machinery coverage and automobile liability. liability.

The basics of these coverages The basics of these coverages

Are outlined as follows:Are outlined as follows:

2626

WORKERS COMPENSATIONWORKERS COMPENSATION

Workers compensation insures against claims Workers compensation insures against claims for work related injuries or diseases suffered by for work related injuries or diseases suffered by employees that are compensable by statute employees that are compensable by statute and/or are imposed by law as damages. and/or are imposed by law as damages. Coverage is provided for payment of medical Coverage is provided for payment of medical expenses and reimbursement of lost wages.expenses and reimbursement of lost wages.

Coverage should be considered even if there Coverage should be considered even if there are no regular employees. Protection may be are no regular employees. Protection may be needed in the event the association employs needed in the event the association employs casual labor or if the association hires an casual labor or if the association hires an independent contractor who has no insurance independent contractor who has no insurance coverage.coverage.

2727

WORKERS COMPENSATIONWORKERS COMPENSATION

Employees of Independent Contractors:Employees of Independent Contractors:

Q: Q: Isn’t the contractor responsible for its employees? Isn’t the contractor responsible for its employees?

A: A: Normally, independent contractors with employees are Normally, independent contractors with employees are required by AZ state law to maintain Workers required by AZ state law to maintain Workers Compensation insurance. However, when a contractor Compensation insurance. However, when a contractor fails to maintain the required insurance, a sick or injured fails to maintain the required insurance, a sick or injured employee may – and often does – recover direct from employee may – and often does – recover direct from the Association – even though he or she is not an the Association – even though he or she is not an Association employeeAssociation employee

2828

WORKERS COMPENSATIONWORKERS COMPENSATIONPart-Time, Casual, Seasonal & Unanticipated Part-Time, Casual, Seasonal & Unanticipated

Employees:Employees:

Q: Q: Is it possible to have an employee and not know it? Is it possible to have an employee and not know it?

A: A: A person performing services for you may or may not be an A person performing services for you may or may not be an employee for Workers Compensation purposes. What appears to employee for Workers Compensation purposes. What appears to be an independent contractor relationship – and which may indeed be an independent contractor relationship – and which may indeed be one for all purposes – could be an employment relationship be one for all purposes – could be an employment relationship where Workers Compensation is concerned. Aside from any other where Workers Compensation is concerned. Aside from any other considerations, courts and Workers Compensation commissions considerations, courts and Workers Compensation commissions lean toward an employment relationship whenever the person in lean toward an employment relationship whenever the person in question is otherwise uninsured.question is otherwise uninsured.

2929

EMPLOYEE BENEFITS LIABILITYEMPLOYEE BENEFITS LIABILITY

Employee benefits liability provides coverage for errors Employee benefits liability provides coverage for errors and omissions which may occur in the administration of and omissions which may occur in the administration of the association’s employee benefits program. the association’s employee benefits program.

Usually written on a claims made form, the coverage will Usually written on a claims made form, the coverage will respond for example, when in the event of an respond for example, when in the event of an administrative error an employee is not added to the administrative error an employee is not added to the group health policy and the employee or covered family group health policy and the employee or covered family member suffers a serious illness or accident.member suffers a serious illness or accident.

The association should establish whether this coverage The association should establish whether this coverage is subject to a retroactive date, deductible and/or an is subject to a retroactive date, deductible and/or an aggregate policy limit.aggregate policy limit.

3030

BOILER AND MACHINERYBOILER AND MACHINERY

Boiler and machinery coverage provides coverage for exposures Boiler and machinery coverage provides coverage for exposures which are normally excluded in the property coverage form. Boilers, which are normally excluded in the property coverage form. Boilers, pressure vessels and mechanical equipment including pressure vessels and mechanical equipment including compressors, pumps, fans, blowers, engines, turbines and wheels compressors, pumps, fans, blowers, engines, turbines and wheels can be covered for mechanical breakdown perils. Most boiler forms can be covered for mechanical breakdown perils. Most boiler forms will provide coverage for individual heating and air conditioning will provide coverage for individual heating and air conditioning units, as well. Loss of income and extra expenses incurred as a units, as well. Loss of income and extra expenses incurred as a result of a mechanical breakdown can also be covered.result of a mechanical breakdown can also be covered.

3131

BOILER AND MACHINERYBOILER AND MACHINERYCommon terminology necessary to understand boiler and machinery Common terminology necessary to understand boiler and machinery

coverage includes:coverage includes: AccidentAccident

A sudden accidental breakdown of the object or part which manifests A sudden accidental breakdown of the object or part which manifests itself by physical damage and necessitates repair or replacement of the itself by physical damage and necessitates repair or replacement of the object or part.object or part.

Repair or ReplacementRepair or Replacement Reimburses the association for the amount actually expended to repair Reimburses the association for the amount actually expended to repair

or replace damaged property. Payment is normally made for the lowest or replace damaged property. Payment is normally made for the lowest of the costs either to repair or replace the object or part.of the costs either to repair or replace the object or part.

Extra ExpenseExtra Expense Expenses incurred to continue operations after an insured accident; i.e. Expenses incurred to continue operations after an insured accident; i.e.

rental equipmentrental equipment Expediting ExpensesExpediting Expenses

Expenses incurred to get the association back in operation in the Expenses incurred to get the association back in operation in the shortest time possible; i.e., air freight feesshortest time possible; i.e., air freight fees

Joint Loss AgreementJoint Loss Agreement Provides prompt payment of a claim for the association when the Provides prompt payment of a claim for the association when the

package and boiler and machinery policies both must respond to a losspackage and boiler and machinery policies both must respond to a loss

3232

AUTOMOBILEAUTOMOBILEThis coverage is needed for the operation of motor vehicles. A This coverage is needed for the operation of motor vehicles. A policy includes liability coverage for protection against third party policy includes liability coverage for protection against third party claims arising from alleged bodily injury or property damage to claims arising from alleged bodily injury or property damage to members of the public. Coverage may also be provided for medical members of the public. Coverage may also be provided for medical payments, collision, comprehensive perils and non-owned and hired payments, collision, comprehensive perils and non-owned and hired autos.autos.

Non Owned AutoNon Owned Auto Provides protection against the exposure of the association from Provides protection against the exposure of the association from

liability for operation of autos that it does not own. For example, liability for operation of autos that it does not own. For example, a claim could be made against the association when an a claim could be made against the association when an employee is involved in an auto accident while on association employee is involved in an auto accident while on association business.business.

Hired AutomobileHired Automobile Protects the association from liability for operation of Protects the association from liability for operation of

automobiles that it hires, rents, leases or borrows.automobiles that it hires, rents, leases or borrows.

3333

3434

INSURANCE PRIMER FOR INSURANCE PRIMER FOR ASSOCIATIONSASSOCIATIONS

INSURANCE PRIMER FOR ASSOCIATIONS Scott F. McLaughlin, CIC, CRM, CIRMS CAU, Inc. Office: 800-228-1930 Ext. 7182 Cell: 480-215-2927 Email: [email protected].

Documents

machinery coverage

contingent liability

coverage forms

coverage parts

replacement cost policy

agreed value coverage

special form special

property ages