Ensuring Insurance

It’s a simple idea: institute a requirement that your shareholders or unit-owners get homeowners insurance for their apartments. It offers your residents an extra layer of protection in case of a fire, flood, or other catastrophe, and it’s relatively inexpensive. But simple ideas often require complex tracking.

Someone is going to have to monitor whether or not everyone has renewed their insurance every year – and the daunting task will probably fall on your manager. Attorneys, however, say that it is important: the more insurance a building has, the better the outcome for everyone in the event of a catastrophe.

Attorney Ken Jacobs, a partner at Smith, Buss & Jacobs, reports that five of the buildings he represents altered their (condo) regulations or their (co-op) house rules to require residents to purchase (and annually renew) homeowners’ insurance. The board sets the minimum and maximum limits for deductibles. If anyone refuses to obtain insurance, he or she is fined.

That’s what happened at one property, which, in its first year of requiring insurance, found that five or six people hadn’t provided proof of renewal. After the fines hit, however, that problem soon disappeared. “It’s working smoothly now,” says Jacobs. “I’m sorry that the managing agents have more paperwork to send out, but I think this one is a worthwhile burden.”

Adds attorney Deborah Koplovitz, a shareholder at Anderson Kill, “It is definitely a good idea, and I think it’s not an idea that anyone in the building should be fighting.” And if the biggest stumbling block is not wanting to overwhelm your manager, there are ways around that. “The board could appoint a subcommittee of shareholders or unit-owners to maintain a spreadsheet and do it themselves,” Koplovitz says. “They don’t have to dump it on the managing agent. You could also have the super, if you have a smaller building, have a file, and everyone could give their certificate of insurance to the super.”

It’s not a heavy lift, she says, adding, “There’s ways around it.”