I Hate Condo Coverage Don t You?

Transcription

1 I Hate Condo Coverage Don t You? Sponsored By:

2 I hate condo coverage don t you with Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CPIW Vice President of Technical Affairs Massachusetts Association of Insurance Agents This program is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. With special thanks to the Insurance Services Office, Inc. for advance information, continued support, and permission to use their forms and information. 1

3 Say what on binder? I am in the process of writing a HO6 policy for someone. The mortgage company that is requesting a binder is asking for specific wording on the binder. I spoke with my underwriter at the company and she said to not include that wording after she spoke with a supervisor. The wording requested is: Coverage is sufficient to cover unit in its condition prior to loss claim event or state guaranteed replacement cost. Since the HO6 only covers a minimal amount on Coverage A (usually to cover deductible under master) and the insured's personal property, and it does not provide guaranteed replacement cost, is this something they should be even asking from me? Who is supposed to determine what the insured needs for Coverage A under an HO6? 2

4 Say what on binder? We have received the following language for a binder on new HO6 personal Condo purchases: HO-6 verification of insurance binder with sufficient coverage binder must state/comment "that the amount is sufficient to repair the condo unit to at least its condition prior to a loss claim event." Mortgage Underwriter tells me these are the 'New rules' that it is no longer 20% of assessed value. Is this Mortgagee specific? Or has there been a recent ruling change? 3

5 Say what on binder? I am a real estate agent in Massachusetts and am selling a condo in Massachusetts. The underwriter for the loan is asking for ordinance and law coverage on the master insurance policy. I checked with the in insurance carrier and it is not part of the policy. Can you please tell me if this is required insurance or is this extra coverage. Is this mandated in Massachusetts. 4

6 Say what on binder? So Fannie Mae has rearranged its directives to the banking industry that wants to be able to sell their loans. January 2016 Fannie Mae updated its FAQS for Project Insurance requirements Does the master property insurance policy or a related endorsement have to state 100% replacement cost? No, but the amount of coverage described in the terms of the policy and/or endorsements must equal 100% of the insurable replacement cost of the project improvements. (It doesn t state that binders from the master policy must STATE the insurance is provided at 100% of replacement value.) 5

7 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements Why does Fannie Mae require master property insurance policies to include a Building Ordinance or Law Endorsement? Fannie Mae requires the Building Ordinance or Law Endorsement if the enforcement of any law or ordinance results in increased costs for repairs or reconstruction or additional demolition and removal costs for both damaged and undamaged portions of a covered building. Without this endorsement, the HOA would not have coverage to pay for these additional expenses in the event of a loss. 6

8 Say what on binder? (I personally think ordinance or law is GROSSLY undersold and can create a major issue in a condo association. I think banks should demand ord/law on ALL loans PS there is a requirement for Equipment Breakdown coverage too in the master policy ) 7

9 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements If a condo master/blanket insurance policy provides for all-in coverage, is an HO-6 policy for the individual condo unit necessary? Fannie Mae does not require an HO-6 insurance policy for the condo unit when the master/blanket policy provides for all-in coverage. However, if the policy excludes coverage for improvements or betterments, the borrower must obtain an HO-6 policy that provides coverage for 100% of the insurable value of the improvements and betterments. 8

10 Say what on binder? Some companies DO provide all in endorsements otherwise the normal ISO CP or BOP with condo endorsements states the building limit can include anything the condo agreement/bylaws tells it to. If the policy is all in, is the limit sufficient for a total loss? If the bylaws tell the association to include improvements and betterments of a unit, is the master policy limit sufficient? 9

11 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements What is meant by the term improvements and betterments? The details included in the definition of improvements and betterments may vary by insurance carrier, but generally refer to permanent changes, alterations, or upgrades made to an individual unit. Further details and guidance should be available from the insurance agent to confirm that the HOA s master policy, combined with the unit owner s HO-6 policy, provides sufficient coverage to restore an individual unit to its condition prior to a loss claim event. 10

12 Say what on binder? (If the bank wants you to state that the Coverage A limit is sufficient coverage to restore an individual unit to its condition prior to a loss- DON T DO IT - you don t know. Besides, much of a total loss is covered under the master policy in common elements. Quite possibly much building value in the unit can be the responsibility of the master policy if the bylaws told the association to cover it. 11

13 Say what on binder? Did the unit owner tell the association management office or property manager of the association about upgrades and did they pass it along to the commercial agent. And, was the commercial policy amended appropriately? The agent for the HO-6, has NO idea how accurate the master policy is at valuation.) 12

14 Say what on binder? Actual claim Last fall, our entire Condo complex was destroyed by wild fires in the Smokey Mountains of Tennessee. 7 buildings and 77 units with a 100% total loss. We are now discovering that we are very short, about 5 million (25%) in insurance money to rebuild the common areas. Any special assessment is out of the question. It would require 100% approval from the owners and that is not going to happen. Knowing our budget, many construction companies will not even place a bid to rebuild, they know we are not even close. 13

15 Say what on binder? Actual claim It appears that a vote will be taken very soon to simply dissolve the association. We will sell the remaining assets, split up the proceeds and move on. Lawsuits are already to be talked about and I am convinced that they will happen. Who is responsible for the lack of insurance? And is there any action that can be taken? -The Board may have failed to do a required annual review, and if so, could it fall on their D&O Insurance (Directors and Officers coverage). -The Insurance agent who set up and sold the policy and said this is all you need. 14

16 Say what on binder? Kind of scary wouldn t you say. What did YOU say on the binder for the individual unit owner s bank If the commercial agent OMG.depending on what you said. D&O policy has exclusions for failure to purchase insurance or having inadequate insurance Loss assessment if each of the 77 unit owners had 50,000 of loss assessment that would provide $3,850,000 Commercial agent s EO for the remainder depending on what stated on certificates for all the unitowners? 15

17 Say what on binder? MANY sets of bylaws require a yearly independent appraisal (that doesn t mean what you do with software) do YOU read bylaws if you read them and see this perhaps you could suggest that it be done especially if you are the commercial agent 16

18 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements Can Fannie Mae provide more guidance on the requirement to restore the unit to its condition prior to a loss claim? How should a seller/servicer determine this? A seller/servicer should use the best known/available information to determine whether the insurance coverage provided at the loan s origination was a reasonable representation of the condition of a property at the time the mortgage loan was delivered to Fannie Mae. Examples to determine the reasonableness of coverage include, but are not limited to: an appraisal, a replacement cost estimate performed by a third party the original or updated condo unit specifications, or an interior Broker s Price Opinion. 17

19 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements Can Fannie Mae provide more guidance on the requirement to restore the unit to its condition prior to a loss claim? How should a seller/servicer determine this? It is a servicer s responsibility to ensure that the borrower maintains at least that amount of coverage throughout the life of the loan. The borrower may, of course, increase the amount of coverage. (It is the bank s (servicer s) responsibility to ensure the borrower maintain correct valuation throughout life of loan) 18

20 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements Fannie Mae s guidelines prior to 2012 stated that if a condo master/blanket insurance policy provided only bare-walls coverage, an HO-6 insurance policy had to be obtained in an amount no less than 20% of the condo unit's appraised value. Under the current guidelines, how much HO-6 insurance coverage as a percentage of the unit s appraised value is required? The amount of coverage necessary under an HO-6 insurance policy is determined as a result of collaboration between the insurer and the borrower. Fannie Mae no longer requires that the amount of HO-6 coverage equal a specific percentage of the condo unit s appraised value. I don t see a mandate for a guarantee of value. 19

21 Say what on binder? January 2016 Fannie Mae updated its FAQS for Project Insurance requirements Why does Fannie Mae require the coverage under the HO-6 insurance requirements to be determined by the insurer? Can it be determined by some other entity or method? Yes, it can be determined by another entity or method. When an HO-6 policy is required, the seller/servicer must ensure that the policy provides coverage in an amount that is determined from the best known/available information to the seller/servicer, including existing information from the borrower in collaboration with the insurer and the condo association. 20

22 Say what on binder? We do the best we can and then buy EO insurance. There are no guarantees. The FAQ for condo insurance is 5 pages long. I think banks should review the bylaws and then the common policies to determine if the individual unit owner is sufficiently insured through the master policy or needs additional coverage through the personal condo policy. With shared living and policies there are no guarantees, just people trying to do the best that they can. 21

23 Banks and listing as mortgagees The mortgagee wants to be listed on the policy insuring the unit being mortgaged. They want to be listed on the commercial policy as well as the HO-6. What do they have a right to? 22

24 Banks and listing as mortgagees Well that might NOT be possible. The mortgagee has EVERY right to be on the HO-6 policy that is issued to the individual. The mortgagee does NOT have a right to expect to be added to the commercial policy that is issued to the association. Most associations create an insurance trustee and the commercial master policy has a loss payment clause stating that the loss will be settled with this individual and that s it the insurance carrier has met its requirements to pay the loss. If there are multiple units and each unit is mortgaged...there wouldn t be a loss payment check BIG enough to list all the mortgagees! The unit owners as well as their corresponding mortgagees must rely on the appointed or elected trustee to do the right thing. 23

25 Banks and listing as mortgagees In the CP Condominium Master Coverage Form The term mortgageholder includes trustee so that loss payment checks can be issued to the entity that is generally mentioned in the bylaws to have authority over claim payment 24

26 Banks and listing as mortgagees In a multiple unit building it would be a horror show to have to list every unitowner and individual mortgagee on every claim payment check involving common area 25

27 Banks and listing as mortgagees There is NO way that any insurance company will want to notify a myriad of mortgagees or unit owners. IL only requires cancellation to the first named insured. If the association takes out a loan and has a mortgagee then IT will get the cancellation or non-renewal notice 26

28 WHO is insuring WHAT I write the insurance for this condo association and one of the units is selling. The lawyers office is giving me a very hard time in regards to the certificate of insurance. I have always been told that you go to the insurance section of the by-laws or in this case, the declaration, to see what the master policy covers. The insurance section states Fire and Liability insurance shall be carried on the building in an amount equal to the full replacement value of the building. The cost of that insurance shall be shared equally by the unit owners. 27

29 WHO is insuring WHAT The paragraph above the insurance section gives a description of the undivided interests in the common areas and facilities pertaining to each unit and description of unit owners responsibilities. So if you look at section V paragraph D, it says, Each Unit owner shall be responsible for the maintenance, repair and replacement of all portions of his or her unit. In addition, the following costs are hereby specifically allocated: then goes to the insurance section. 28

30 WHO is insuring WHAT Reading this, it is my understanding that the Master Policy will provide all of the building coverage. The paragraph D section, just states that the Unit owner is responsible for the repairs for his own unit (meaning the other unit owner(s) would not be responsible to be in charge of repairs for someone else s unit.) Am I correct in understanding this? The lawyers office thinks that the Unit owner needs building coverage under their HO-6 because they are responsible for their own unit 29

31 WHO is insuring WHAT Hmmm There can be multiple provisions in bylaws insurance maintenance I d like to see the bylaws and see the exact wording 30

32 WHO is insuring WHAT Interesting there is no definition of building but Building is 2 units And as shown on previous page the insurance section says to insure the building. 31

33 WHO is insuring WHAT Having to maintain it (unit) and having to insure it are two different issues. I have seen a TON of bylaws where the unit owner is required to maintain the inside of his/her/their unit but the bylaws tell the association to insure it The association doesn t want to be involved with fixing linoleum, etc. within a unit So the insurance for the unit is in the master policy but what is the master policy deductible? 32

34 WHO is insuring WHAT The agent stated: Ok, agreed. Thank you!! PS Deductible is $1,000 Don t forget a suggestion carry some Coverage A with HO Special Form Coverage A because roof leaking rain into unit causing water damage is not covered under special form BOP or CP but the big stuff like fire/wind is the master policy 33

35 WHO is insuring WHAT HO-6 as written by ISO any edition is a named peril policy applicable to Coverage A and Coverage C There are 15 perils in a world of infinite possibilities so ALWAYS need HO Coverage A Special Form 34

36 WHO is insuring WHAT HO Unit-owner Coverage A Special Coverage makes it open perils like the HO-3 for building. This will be broader coverage than the special coverage of commercial lines 35

37 WHO is insuring WHAT CP Special Form Cause of Loss or BOP Special form have limitation for utility services No coverage for power surge damage to building if surge originate OFF premises such as downed power line 36

38 WHO is insuring WHAT CP Special Form Cause of Loss or BOP Special form Also excludes constant and repeated seepage defined as 14 days There is no coverage for rain, sleet, snow, ice damage to interior of building unless covered cause of loss caused it other than ice dam 37

39 WHO is insuring WHAT Even if the master policy appears to be full replacement value who REALLY knows. Remember that Tennessee claim Even though the Master Policy deductible is ONLY $1,000 in this case One should suggest some just in case coverage for those pesky perils that could happen within the unit and NOT be covered under the master policy 38

40 WHO is insuring WHAT ISO HO-6 Also remember that perils Activate Coverage D Loss of Use And Section I Loss Assessment 39

41 HOW do I insure it Our insured is purchasing a condo with a detached garage. The garage is in a row with other garages. The Coverage B, Other Structures is unavailable on the HO6. The options to increase for other structures is on premises rented/no business use or on premises with permitted incidental business use or off premises no business or rental. None of these fit. And how would I determine the limit if it is a row of garages and not just one and it has not been determined if the condo association would be responsible. Are you aware of any way to provide coverage if needed? 40

42 HOW do I insure it Just because the insured owns it doesn t mean he or she has to insure it? Is the master policy covering it? What do the bylaws say about the association's responsibility for insurance? If the master policy is not covering the garage then the insured can under any edition of the ISO HO-6 because Coverage A includes all real property 41

43 HOW do I insure it ISO HO-6 - Coverage A includes alterations/fixtures/improvements in the unit real property pertaining exclusively to the unit owned or not Anything association tells you to cover owned or not Structures owned solely by you at the location of the unit (garage) 42

44 HOW do I insure it All the restrictions for business in a separate structure as found in Coverage B in the ISO HO-3 are also found in the ISO HO-6 I think that company software should be helpful in determining value to add to Coverage A 43

45 Master policy deductible Can you tell me if the MA Condo law allows associations to assess unit owners for the association deductible if they are responsible for the loss? 44

46 Master policy deductible I asked. Are you talking about a loss they caused to common property or a loss they caused to a fellow unit owner or a loss within their unit? And the agent.said both 45

47 Master policy deductible MGL 183A section 13 states: Section 13. All claims involving the common areas and facilities shall be brought against the organization of unit owners, and all attachments and executions related to such claims shall be made only against common funds or property held by the organization of unit owners and not against the common areas and facilities themselves other than the leasehold of any lease included therein. After such common funds and property have been exhausted, individual unit owners shall be liable for the balance due, if any, provided, however, that the amount for which a unit owner is liable shall be limited to a sum equal to the amount of his percentage interest in the common areas and facilities times the balance due. The real answer comes from the bylaws 46

48 Master policy deductible The real answer comes from the bylaws one such set of bylaws states: 47

49 How much to insure IF A CONDOMINIUM MASTER POLICY IS ALL-IN BUT INDICATES IT DOES NOT INCLUDE BETTERMENTS AND IMPROVEMENTS, DOES THE MORTGAGEE HAVE THE RIGHT TO REQUIRE THE UNIT OWNER TO CARRY 20% OF THE APPRAISED VALUE? 48

50 How much to insure It appears that mortgagee is still on the 2009 Fannie Mae requirements so if the commercial certificate doesn t state 100% replacement value including unit owner improvements and betterments then the bank will ask for an HO-6 at a minimum of 20% of the unit appraisal value 49

51 What to do Some of our insurance companies, including Company X, offer an endorsement to their Condo Association BOP, that provides coverage for Unit Owners Fixtures, Improvements and Alterations regardless of how the condo docs read effectively providing all in coverage. This sounds great to an insurance buyer, but raises the following concerns: In the event of a total loss, does the condo association have an adequate limit to pay for both the structure and all the unit-owners Additions & Alterations? 50

52 What to do By accepting this endorsement, do I still satisfy the coinsurance requirements? Does the condo association know what the value is of those Additions & Alterations? Should the condo association advertise this coverage to the unitowners? Do the unit-owners want to pay for their neighbors Additions & Alterations? I want to offer my insureds the best products available, but have mixed feelings about this endorsement. 51

53 What to do Regarding the FIRST issue is there adequate insurance again remember the previous issue of Tennessee If the association s policy covers all improvements and betterments the association MUST keep track of them and the best way to do that is the association MUST pay for an independent appraisal of building value which entails looking at each unit s insides regarding the second issue about co-insurance. That endorsement has NOTHING to do with co-insurance provision One must use the agreed value provision to remove co-insurance and agreed value is NOT guaranteed replacement value. again an independent appraisal each year 52

54 What to do Regarding the FIRST issue is there adequate insurance again remember the previous issue of Tennessee If the association s policy covers all improvements and betterments the association MUST keep track of them and the best way to do that is the association MUST pay for an independent appraisal of building value which entails looking at each unit s insides regarding the second issue about co-insurance. That endorsement has NOTHING to do with co-insurance provision One must use the agreed value provision to remove co-insurance and agreed value is NOT guaranteed replacement value. again an independent appraisal each year 53

55 What to do Third issue does the association keep track of all the I&B updates? unit owner s don t cover buy enough coverage for master 54 policy deductible should loss happen in their unit I seriously doubt that again a yearly appraisal. 4 th issue should association advertise this all in coverage they do but all in is NO good if the limit of building insurance isn t sufficient ordinance or law coverage isn t added debris removal coverage isn t increased

56 What to do 5 th issue Do unit owners want to pay higher maintenance fees to cover I&B of fellow unit owners? Who knows that should be decided at an association meeting I agree with all of your points.and I think each unitowner should have some insurance.but how much? Since the ISO BOP endorsement or CP states: Unit-owner's Insurance A unit-owner may have other insurance covering the same property as this insurance. This insurance is intended to be primary, and not to contribute with such other insurance. 55

57 What to do And the ISO HO-6 91/2000/2011 essentially states it is excess with a slight issue with master policy deductible. To totally insure unit owner values with bylaws that told the association to cover them or a BOP or CP with the all in endorsement is a gross over insurance issue. So, what to do? 56

58 Mortgagee balk on deductible Has anyone run into a lender denying a loan because an association has a per unit deductible? Loan denied at Condo association because underwriter said the per unit deductible exceeded 5% of the amount of building coverage. Underwriter took 344 units and multiplied by $10k, per unit deductible --- in the event of a total loss. 57

59 Mortgagee balk on deductible Maximum Deductible Amounts For policies covering the common elements in a PUD project and for policies covering condo or co-op projects, the maximum deductible amount must be no greater than 5% of the face amount of the policy. For losses related to individual units in a co-op project or for individual PUD units that are covered by the blanket policy for the project, the maximum deductible amount related to the individual unit should be no greater than 5% of the replacement cost of the unit. If, however, the policy provides for a wind-loss deductible (either in the policy itself or in a separate endorsement), that deductible must be no greater than 5% of the face amount of the policy. 58

60 Mortgagee balk on deductible So the lender is saying that POTENTIAL deductible under master for entire complex of 344 unit at 10k per unit is above 5% deductible Fannie permits. Is this per unit deductible for ALL losses such as fire and wind or for something like ice dam that is not a potential total loss issue the fannie mae requirement is: For policies covering the common elements in a PUD project and for policies covering condo or co-op projects, the maximum deductible amount must be no greater than 5% of the face amount of the policy. 59

61 Mortgagee balk on deductible If the bylaws tell the association to cover the building whether common property or individually owned property and there is a $10,000 deductible PER UNIT for ANY loss such as fire or wind which could cause a total loss then the overall amount of deductible could be higher than the 5% allowed Even if the individual unit owner purchases the $10,000 coverage A for his/her unit there is no guarantee that all the other unit owners have. I might look for a different bank 60

62 I personally think he will have to shell out the addl $7k but wanted to get 61 your thoughts. Deductible and loss in client s unit One of my client s had a recent claim Unit owner above washing machine hose went causing water damage to my client s unit below. My client has since called me stating that the Master condo s deductible is NOW $25,000 (in which he currently only has $10,000 for A). He was notified about it at some point but just forgot to inform us. So, all in all his insurance carrier has paid out about $5500 and he is going be in it himself for about $7k due to the deductible issue. Does he have any recourse in going against the unitowner s insurance carrier that caused the damage?

63 Deductible and loss in client s unit When the deductible on the master policy increases, the unitowners need to buy enough Coverage A to respond. I would bet there is a waiver of subrogation clause written into the bylaws where unit owners give up their rights of action against the association and fellow unit owners. If not, suing would be the only recourse 62

64 How MUCH coverage A do I need How do I help my client determine how much building coverage they need for their HO-6? 63

65 How MUCH coverage A do I need I was originally taught and still believe that I must see the bylaws in order to help the client ascertain what it is they need to cover. I KNOW they OWN the unit whatever the deed states 100% - but do they HAVE to insure it When buying into a condominium ownership..they get two things 100% ownership in their unit % of ownership in common areas or property 64

66 How MUCH coverage A do I need Suppose the following are the insurance instructions in the bylaws: These bylaws tell association to cover the building as a whole even fixtures within individual units 65

67 How MUCH coverage A do I need But then I ask what IS the master policy deductible as if loss happens within unit the unit owner will have to cover it Should the unit owner have some just in case coverage incase the association is underinsured to take care of the issues between commercial perils and personal perils to have extra coverage for when the master policy isn t enough as in the Tennessee claim issue 66

68 How MUCH coverage A do I need These bylaws only have association cover the common areas so unit owner must carry a LOT of Coverage A to cover ALL property losses within unit FYI as discussed before Waiver of subrogation requirement 67

69 How MUCH coverage A do I need Will need to ask all sorts of questions to obtain a ballpark figure of reconstruction value within the unit Might not be a bad idea to have the client find out of there is a ballpark construction cost per foot as another means of ascertaining value. 68

70 How MUCH coverage A do I need The association is told to cover the unit as it originally was so master policy will be covering the value of the unit within the commercial policy 69

71 How MUCH coverage A do I need Again everything we said about the first set of bylaws about having some Coverage A What if the unitowner makes $25,000 of improvements in the kitchen. Where are these covered And what about 5 years later what is the Coverage A limit on the HO-6 Or.what if the unit is sold what does the new unit owner insure? 70

72 How MUCH coverage A do I need Will the commercial policy do what the bylaws require if the association is supposed to cover the individually owned unit areas? 71

73 How MUCH coverage A do I need BOP condo change language CP Condo Association form BP or BP

74 How MUCH coverage A do I need ISO commercial policies do whatever the bylaws (condominium association agreement) tell it to So to ISO it s all about the bylaws for commercial agent to determine what to cover For the personal lines agent to cover what the association policy does not 73

75 How MUCH coverage A do I need The commercial agent said that the commercial policy was all in that s not what I read in the bylaws but he said the bylaws don t matter How can that be? 74

76 Some companies have all in endorsements where the bylaws are determining coverage the building is treated as a whole regardless of ownership 75

77 How MUCH coverage A do I need But it would be a carrier specific endorsement And What happens on renewal is that company STILL on the risk All we said about the bylaws telling the association to insure the building as a whole apply here, too 76

78 How MUCH coverage A do I need What DO you do on renewal with condominiums I bet the company doesn t increase Coverage A as it does with HO-3/5 What if bylaws or commercial policies change did client warn you.remember question prior to this 77

79 How MUCH coverage A do I need Should you ask on renewal is commercial coverage the same have you done any alterations/improvements which could be a problem if commercial policy doesn t cover Has master policy deductible stayed the same 78

80 How MUCH coverage A do I need What does Coverage A under the HO-6 cover It can cover whatever the client needs to cover Anything within the unit Any real property like decks that pertain to unit owner s exclusive use whether owned by unit owner or not Whatever the association tells them to Separate structures 79

81 How MUCH coverage A do I need What if the unitowner buys a lot of Coverage A and the bylaws told the association to cover the unit If there is a fire loss within unit which policy pays? 80

82 How MUCH coverage A do I need BP (MA BP 17 07) or CP Commercial insurance is PRIMARY over individual s insurance 81

83 How MUCH coverage A do I need HO-91 language 7. Other Insurance.. If, at the time of loss, there is other insurance in the name of a corporation or association of property owners covering the same property covered by this policy, this insurance will be excess over the amount recoverable under such other insurance. HO-2000 language F. Other Insurance And Service Agreement.. 2. If, at the time of loss, there is other insurance or a service agreement in the name of a corporation or association of property owners covering the same property covered by this policy, this insurance will be excess over the amount recoverable under such other insurance or service agreement. The ISO HO-91 and HO-2000 states it is EXCESS 82

84 How MUCH coverage A do I need What does Excess mean does that mean it fits nicely into the master policy deductible???? No said ISO ISO put in writing regarding the HO-91 and HO-2000 The unit owner is only covered for the amount of loss that exceeds the amount recovered by the association under its policy. If the association doesn t recover because of a high deductible or other reasons, the unit-owner does not recover. 83

85 How MUCH coverage A do I need According to ISO if the bylaws told the association to cover the unit owner property and it does but a master policy deductible applies then Coverage A should NOT respond. According to ISO there is no way to fix this under the ISO HO-91 My advice is someone in management at the agency talks to upper management at company underwriting and gets it in writing that Coverage A WILL apply to master policy deductible issues. Or the agency will have to pull all the HO-6 policies, autos and PUPs 84

86 How MUCH coverage A do I need Under the ISO HO-2000 program there is an endorsement HO Premium is 25% of condo base premium This endorsement guarantees that the unitowner will be able to access his/her Coverage A if the Association has single entity bylaws but has a large deductible 85

87 How MUCH coverage A do I need HO-2011 Other insurance provision now says Coverage A can be PRIMARY when master policy SHOULD have covered loss due to bylaws - but master policy deductible was applied 86

88 How MUCH coverage A do I need Getting a letter like this it becomes important to know what to do if you have the client under an HO-91 or HO

89 What endorsements should always be added? Coverage A Special Form HO Loss Assessment HO As well as every other endorsement a homeowner needs replacement cost contents personal injury sump pump/sewer back up ordinance or law (what did master policy do) Earthquake 88

90 HO-2011 same What endorsements should always be added? 1. Makes building losses open perils 2. Enhances range of perils activating Coverage D Loss of Use 3. Enhances range of perils activating Add l coverage Loss Assessment 4. It s CHEAP $1.00 per 1000 of Coverage A 89

91 HO-91 similar HO Loss Assessment Increased limit to increase to an ISO maximum of $50,000 Increase limit NOT applicable to assessments that result only from Association policy deductible Usual cost - under $

92 HO-2011 filing revises Loss assessment endorsement Changes name to reflect real intent... Supplemental coverage Removes "special limit" language 91

93 Any last questions that you are dying to ask.. 92

94 Thank you for attending I hate condo coverage. 93