The insurance renewal is completed, the coverage is procured, and the Board and management let out a collective sigh of relief.
Due to market conditions, many communities are changing carriers. When writing new property, or every few years, carriers will send a Risk Inspector out to view what they are insuring and make sure the building matches the information they were given when offering the quote.
Risk Inspectors are also viewing the property for items of concern that could lead to claims. These items are called Recommendations but are often mandatory repair requirements. If repairs are not completed in a specific time frame, the association could face cancellation or non-renewal of the policy.
Common Recommendations:
- Emergency Exit signs blown down in the wind
- Red sprinkler bells should be painted (and free of birds nests – they love to nest there)
- Trim back bushes and trees from homes to avoid wind damage from trees
- Sidewalk or parking lot cracks that could be a trip hazard
In recent months, carriers have issued mandatory replacement of the electrical panels in the units.
Federal Pacific Electric panels have been known to cause electrical fires and were installed from the 1950’s through the 1980’s. This recommendation causes a few issues:
- The electrical breaker panels are part of the unit, and maintenance/replacement is typically the responsibility of the unit owner.
- The association does not include electrical panels in the reserve study, so if taking on this extra expense, the association would have to figure out how to fund the project.
- The carrier sets a limited time to get the panels replaced.
The association will have to play a part in completing the required repairs. Maryland Condominium Act does allow 11-125 Easements and Encroachments (e) Right of entry to make repairs. — (1) The council of unit owners or its authorized designee shall have an irrevocable right and an easement to enter units to investigate damage or make repairs when the investigation or repairs reasonably appear necessary for public safety or to prevent damage to other portions of the condominium.
If you get an unusual recommendation or one that is not contemplated in your regular maintenance or reserve budget, please discuss the item with your agent. Upon request, carriers will allow additional time to complete projects if a plan is in place to take care of the issue.
Some carriers will agree to inspect the property without the manager and/or a Board member. Best practices would have someone from the association accompany the Risk Inspector, especially if you have any work being done at the property.
Mandatory recommendations do not allow you to plan and budget maintenance in a timeframe suited to the community – Another great reason to consider professional management and/or perform regular inspections of your associations.
Click here for more information on handling insurance carrier recommendations.
