Pay Attention to Who Is Insured

Andrew S. Lazarus
Senior Vice President,
Tudor Realty Services

Pay Attention to Who Is Insured

Setting the Scene

It was the weekend, and we received a phone call in the middle of the night. A pipe had burst on an upper floor of a large Upper East Side co-op that we manage. The super was able to get there quickly and shut the water off, but not before there had already been damage to eight apartments and a commercial store. Now we were confronted with a situation involving a number of different shareholders, with various levels of damage that needed to be addressed quickly.

Following the Action

We immediately brought in our insurance coordinator, a specialist in our office who’s very familiar with insurance matters. She needed to talk to the building’s super, the affected shareholders, the board, the building’s insurance company, and also all the insurers of shareholders who had sustained damage to discuss breadth of coverage and how to proceed with the required repairs.
We updated the board right away, assessed the situation, developed a scope for the repairs that needed to be done, and then put the process in motion. Fortunately, the building had good insurance with a reputable firm and the shareholders also had insurance.

Doing It Right

More and more, as managing agent, we are dealing with insurance matters. No longer is our role as managing agent limited to just ensuring that the building’s policy is in place, but we are more frequently dealing with claims, often that touch multiple shareholders and the building itself. It’s important to have someone at your managing agent’s office handle these matters who is well-versed on how to address these issues and can then coordinate with the various involved parties.

This is another great example of why it is so important for boards and shareholders/unit-owners to be aware of what’s covered per the proprietary lease and bylaws and what’s not, and to understand the importance of having proper insurance in place from reputable firms that cover the types of issues that often arise. It is also a reminder why it’s important to update the building’s governing documents, to the extent not already included, to require that shareholders have insurance in place. Boards need to keep a focus on insurance, discuss these issues with the managing agent, understand the process in the event of damage. They should also remind shareholders from time to time about the importance of these issues and how to be prepared and best protected.