It’s 120 days before the building’s insurance policy is coming up for renewal, and the board is wondering: should we shop around?
“If it has a good relationship with its broker, the board should first check with him or her to get a sense of the market,” says Michael Spain, vice president of Brown & Brown, an insurance brokerage. “The broker might say, ‘We’ve gotten quotes during the last five years. I think we should just stay where we are because we know it’s good pricing.’ Or maybe the broker says, ‘It’s a good time to get bids.’” If the board does choose to shop around, it should expect few options. “There are a limited number of insurance companies writing the type of coverage needed for co-ops and condos,” notes Barbara Strauss, executive vice president at York International, an insurance brokerage.
The chief mistake a board can make occurs when a resident says he or she knows an insurance broker. “Maybe [that broker] doesn’t do a lot of co-op insurance, but he wants to come in and give a price,” Spain says. “Because his quote is $1,000 less than your broker’s bid and he’s friends with someone on the board, you listen to him.”
Not a good idea. “You want to talk to the brokers about their claims department,” Spain continues. “You want to talk to them about their history and their pedigree with insuring condos and co-ops to make sure it’s something they understand. The managing agent can be involved, and one or two people from the board could help oversee it. Then, you’d probably want a couple of board members involved with the managing agent, assessing the quotes and, maybe, interviewing. In the end, the board is looking for knowledge of the market and making sure that the brokers understand this segment of the industry.”