Board members, eager to trim expenses, will often look to insurance policies for ways to decrease coverage and lower premiums.
Too often associations have claims denied because the coverage they once had was dropped due to budget concerns.
Also, many association boards failed to understand critical elements of their policies, leaving them with unnecessary or unknown gaps in coverage.
The most common areas that cause trouble for associations include:
- Misrepresentation of facts on insurance applications: if you're unsure, don't fill out the application until you are sure.
Many a policy claim has been denied and coverage cancelled due to inadvertent or intentional misrepresentation on applications.
- Policy exclusions: Don't assume that all claims filed will be covered.
If you're unsure, read the exclusions section of your current policy.
If you're still unsure, talk to an insurance specialist.
Don't leave to chance any gap in coverage.
- Co-insurance penalties: When determining the value of your covered property, make sure it's the most accurate representation of the entire value of the property.
If not, you could see claims paid on just that portion of the value you have insured.
For instance, if you insure your property for $500,000 and it's worth $1,000,000, your insurer will pay your claims based on that $500,000 amount, leaving you to pick up a huge coverage gap.
- Deductibles: If your deductible has been increased within the last few years, now is the time to re-examine that decision based on your association's current reserves and claims history.
Often the cost savings you think you're getting is negated by claims.
As businesses change, so should coverage.
Keeping your policies current and in line with property values is an easy way to alleviate unexpected claims issues.