CONDO ISSUES AND RISK MANAGEMENT

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1 A Deland, Gibson University White Paper Providing Peace of Mind Through Proactive Service. CONDO ISSUES AND RISK MANAGEMENT In the event of a claim a well written insurance policy should provide the means to bring a condo back to where it was before the loss. But why even go that far? Why go through the aggravation brought on by the claim process when the loss likely could be avoided in the first place?

2 Condo Issues and Risk Management In the event of a claim a well written insurance policy should provide the means to bring a condo back to where it was before the loss. But why even go that far? Why go through the aggravation brought on by the claim process when the loss likely could be avoided in the first place? Using coverage provided by an insurance policy is a reactive approach to losses. A better, proactive approach is to avoid, mitigate, prevent, transfer or assume risk via Deland Gibson s Risk Reduction Plan. This approach may generate some up-front costs and require time and attention, but over the long term, savings will likely outweigh the costs and time associated with fewer losses and claims. As many know, financing or paying for insurance premiums is the most expensive way to manage risk. Implementation of loss prevention often only takes planning and time. To begin, working with a risk advisor and the insurance carrier can alleviate some costs and save time. A very effective method is to contact your Deland, Gibson representative and schedule a risk control visit by your insurance carrier. All insurance carriers have a Risk Control Department, also referred to as loss control. This department consists of professionals who have specialized training in hazard analysis. As a service provided by your insurance carrier, you can request a Risk Control appointment during which the specialist will visit your property and survey the location for potential issues that could give rise to losses. Risk Control About Deland, Gibson Insurance Established in 1900, Deland, Gibson has thrived working as a trusted advisor for its client base. A family business since 1900, DG works with clients to lower their Total Cost of Risk through its signature program, the Deland, Gibson Difference. This process is used to identify the unique risks of you and/or your business and ultimately offer strategies to transfer, mitigate, prevent, finance or assume these risks. Learn more at delandgibson.com Risk Control specialists have experience in many industries but let us discuss some of the areas on a condominium property they could survey to aide in your loss prevention efforts. 1. Roof The roof is one area where many losses could arise from. A severe rainstorm could cause a breach of the roof and allow water into the condominium. The damage could be sudden or occur slowly over time. The Risk Control specialist will examine areas on the roof including the covering, the flashing and the drains. If any of these appear to need repair or replacement, the specialist will make note of it. Evidence of ice damming will also be examined and addressed if apparent. 2. Windows and Foundations Windows and foundations in disrepair could also be a cause for future loss. Water can seep between the window and the structure and damage the interior. Faulty window locks can be a target for theft. Checking the windows, repairing and/or replacing them, when necessary, should help prevent some problems.

3 Cracked foundations can be caused by several factors. The soil backfill could cause unnecessary pressure on the foundation. Trees and roots can put pressure against the foundation over time and landscaping angled inward towards the structure could create pooling of water towards the foundation. Survey the property for larger trees and be sure your landscaping is angled away from the structure. 3. Porches and Railings Porches and railings are a major liability threat. The specialist will inspect for instability. If railing is loose or poorly built, it could fail when a person uses it for support. The extent of the injury could be severe but it can also be avoided if unstable railings are properly secured for a minimal cost. 4. Gas Meters An often overlooked issue is the positioning of external gas meters. If these items are located near parking areas and without protection from external damage, a major loss could result from a vehicle striking the meter and the connecting gas line. A simple and inexpensive solution is to install concrete barriers which would sustain the brunt of any damage. 5. Oil Tanks Oil tanks are a significant threat to maintaining clean loss records because tanks fail over time due to corrosion from rust. The tank failure leads seepage of the tank s contents into the surrounding environment. Any polluted soil or ground water will have to be cleaned and that process requires the full involvement of the Environmental Protection Agency (EPA), state and local authorities until the site is tested and approved to be 100% clean by the EPA. This process is often long and very costly but can be avoided if addressed prior to tank failure. Underground Tanks: If an inspection uncovers an underground tank, it is best to determine as soon as possible if the tank is empty. The longer you wait to address the issue, the more expensive it will be to correct it. If the tank is not empty, the contents should be drained and the tank should be cleaned. Then the empty tank should either be removed or filled with concrete or gravel to prevent collapse. If the tank is removed, the empty hole should be filled to secure the surface.

4 Above Ground Tanks: Above ground tanks also present a potential for loss. Rupture can lead to the tank s contents entering into the soil and nearby bodies of water. A good way to prevent spillage is to purchase an oil tank container. The oil tank can be placed inside the container so when a rupture occurs the tank s contents are held by the container. The containers are designed to hold the entire contents of the tank. 6. Hot Water Tanks Hot water tanks are another item susceptible to rupture and no one wants to see 50 gallons or more of water all over their basement floor, which is where tanks should be placed. If a basement location is unavailable the tank should be placed on the lowest possible floor to avoid water damage from floors above. Water tanks, depending on the manufacturer, last varying amounts of years but their life can be greatly extended by preventing interior rust and corrosion. A little known, but very helpful, fact is that there is an item inside water tanks that prevent interior rust and corrosion of the tank and it is called a sacrificial anode. This is a rod made of magnesium or aluminum that is formed around a steel core wire and is screwed into the top of the tank. A six-year warranty residential tank will have one and a twelveyear warranty tank will have two, or an extra-large anode. However, when a water tank is full, the corrosive materials of the water will eat away at the interior metal but with the presence of the sacrificial anode the corrosive materials attack the anode instead of the tank s walls. The process that takes place is called electrolysis and it means that when two metals are physically connected in water, one will corrode away to protect the other. All metals fall somewhere on the galvanic scale of reactivity. When two are placed together in water, it is the nobler, or less reactive, metal that will remain intact, while the more reactive one corrodes. The good thing about a sacrificial anode is that they are much less expensive to replace than a water tank. Depending on the anode, they generally cost under $100 and usually last about 7 years. And the even better news is that they are quite easy to replace by simply unscrewing the old one out of the top of the tank and inserting the new one in its place. Check your tank s owner s manual for information on your anode. 7. Parking Lots Parking lots are another area on a condo s property that can create losses. A lot littered with holes creates a large potential for loss by producing a trip and fall potential and possible damage to vehicles that suddenly encounter the holes. An unevenly paved lot, sidewalk or walkway can also create similar situations. An easy fix to this is to get the holes filled or the lot/walkway paved.

5 8. Snow Removal Snow removal is another impactful issue if your condo is in a cold weather climate. Parking lots, sidewalks and walkways can pile up quickly with snow and ice and create slip and fall possibilities. Be sure your condo has a snow removal contract in place and be sure you obtain certificates of insurance from the snow removal contractor. Also be sure your bylaws document procedures for responses to snow and ice. Conclusion As you can see, there are many areas of potential loss to a condo. A separate presentation on electrical and plumbing issues would take many pages to fully encompass. Simply said with those two areas, have your condominium inspected by a licensed electrician and plumber and be sure your condominium is up to current code. If you live in a condominium or work with one, there are many issues that you should be well versed in. It is good to know that many resources exist to educate yourself. We at Deland, Gibson Insurance want to help you through these issues but most importantly stop them before they start.