As part of our ongoing Problem Solved series, Habitat spoke with Gina Corso, new business account manager at the insurance brokerage Mackoul Risk Solutions.
An unwelcome surprise. We were able to take over a beautiful, well-maintained condominium association. Once we were recognized as the insurance broker of record, it was our responsibility to complete the renewal applications, and we indicated that the association maintains a beach. The carrier came back and advised us that they were unaware of beach exposure. It did not fit their guidelines, and unfortunately they would not renew the coverage.
Major exposure. Beach exposure is not something most carriers entertain. And should there have been an incident at the beach, there would have been no coverage because the carrier was unaware of the exposure, and it's not something that they would have covered if they had known about it. The association also had some boats and kayaks and lifeguard equipment that were not listed on the policy, so if something happened or they were damaged, there would have been no coverage. In addition, the general liability policy had an events exclusion, even though they have multiple association-sponsored events. If someone got hurt at an event, there would have been no coverage. So we had to obtain a separate events policy to make sure that they had coverage for that exposure.
So the association was very exposed. How does this happen? Mention of the beach could have been omitted on the original submission and then renewed year after year with the incorrect information. The carrier didn't inspect in this case, so they relied on the information provided by the previous broker. This happens more often than you would think. I've seen incorrect unit counts, incorrect descriptions of the building’s construction, amenities that are left out in rating. A big one that we see is incorrect owner-occupancy percentage. A lot of carriers have strict guidelines when it comes to the acceptable number of owner-occupied units versus rental units. And if that information is not correct, you can also have a huge issue in regards to coverage because you can potentially be with a carrier who would not have written your insurance if they knew that you had a high rental percentage.
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Always inspect. That’s why it’s important to have a pre-inspection. Some carriers pre-inspect, some do not. If they're not pre-inspecting, it’s important for the board to make sure that it’s having the conversation with its broker and going over all the unique features of the building.
Cost crunch. I'm thankful that we were successful in replacing the condo association’s coverage, but unfortunately we had to lower their limits, and it about tripled their cost. For instance, they had maintained a $50 million umbrella policy, but the most that we were able to get was a $25 million umbrella. When speaking with the insured, we agreed that the $25 million limit was sufficient, but it was a shame we weren't able to match their prior coverage. In the end, the insured was appreciative that we were able to correct the deficiencies and make sure they were covered properly.
A specialist, not a generalist. My advice? Review your coverage, and find a broker who specializes in co-ops and condominiums. That broker is more likely to ask the right questions than a broker who’s a generalist. My office offers either virtual or onsite pre-inspections. That way we can make sure that we have all the information so your building is properly insured.
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