Insurance Decisions How Much Coverage is Enough

From equipment failure and personal injuries to tornadoes and tropical storms, disasters happen. Any community association worth its salt knows that it needs to be prepared for a rainy day. A great chunk of that preparation is insurance.

With a vast array of coverage plans available at an equally expansive array of costs, how can a board decide what its community absolutely needs? What could be useful but isn’t a must-have, and what is entirely superfluous? Florida is famous for hurricanes, but earthquakes seem unlikely. California has the opposite problem. New Jersey may not be a regular target for predatory storms, but in the wake of the damage inflicted by 2012’s Superstorm Sandy, how cautious is too cautious? Some decisions are no-brainers, while others can keep a responsible board member up all night. Fortunately, there are experts and a wealth of resources that can help alleviate a board’s insurance woes.

Begin with Basics

Continuing with the category of freak weather and seismological occurrences, Cappy Stults, president of insurance firm Allen & Stults in Hightstown, says that earthquake and flood coverage isn't an absolute necessity for multifamily communities in the tri-state area, but as it's "relatively inexpensive if purchased with high deductibles," it should be strongly considered.

While flood and earthquake insurance might be a smart investment, other types of coverage are mandatory as specified by an association's governing documents. Property and casualty insurance are must-haves, and as Stults notes, "Directors and officers insurance may not always be required in the documents, but it should not be overlooked. Adequate crime limits for employee dishonesty is a necessity, as unfortunately, there are more and more cases of employee or volunteer dishonesty these days."

Also, if a condo association or an association is a high-rise with a valet parking garage, garagekeepers liability insurance can help protect the association in the event that an owner's vehicle is damaged while under the care of an employee. Finally, Stults suggests that, while not compulsory, all associations should be protected by a workers compensation policy. This coverage can come in handy should a vendor every be injured while doing work on the property.


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