Hillcrest Park Condo Faces $5M Loss and Soaring Insurance Costs After Building Disaster

It's something no board wants to imagine, but building disasters do happen, and in the worst case the damage is so severe that shareholders or unit-owners are forced to evacuate. Robert Ferrara, president of the Ferrara Management Group, confronted that challenge at the Hillcrest Park Condominium in Peekskill, New York, where one of the complex’s ten buildings was destroyed in a devastating fire.

Wake-up Call

“It was around 2:30 in the morning when I received a call that we had a multi-alarm event on our hands,” Ferrara recalls. Without a moment to spare, he contacted the property manager and the board to make sure that the building’s residents were able to escape safely. By the time the property manager and super arrived, everyone had been evacuated with no injuries — including one person who had been trapped in a second-floor unit — and the unit-owners were temporarily sheltered in the condo’s community room. The fire destroyed the 16-unit structure, requiring 25 residents to relocate while it was being demolished and rebuilt. “We were able to assist them contact different aid organizations, including the Red Cross, that we knew could potentially help them find living accommodations,” Ferrara says.

The next step was notifying the condo’s property insurance carrier and informing the displaced unit-owners with their own homeowner’s policy to contact theirs. When catastrophes like fire or flooding occur, the condo association can file a claim for damage to the structure and common areas, while unit-owners are responsible for damage to their individual apartments and its contents.

Good News, Bad News

“The condo’s claim is going to probably be in the $4.5 to $5 million range, but the good news is that it should be made whole at the end of the day,” Ferrara says. The bad news is that the costly claim goes on Hillcrest Park’s loss-run record, increasing their coverage premiums come renewal time in a hard market where increases for condos and co-ops are rising as much as 25%. “When you have a loss of this size, obviously the increase is much more significant,” he explains. “Unfortunately, the condo’s insurance costs went up dramatically on their last renewal.”

Like any major capital repair, the rebuilding project at Hillcrest — which began in January 2023 and is anticipated to be completed soon — required strict oversight to avoid delays as much as possible. That includes getting all the necessary building permits and ensuring that the engineer’s designs are up to code. “We also had to get things set up with Con Edison during the rebuilding, because we can't start doing the interior repairs like installing sheetrock and other items before we get their approval,” Ferrara adds. “Those things did create the majority of delays in this project, but we still managed to keep things on track.”

Plain talk

During the entire process, communication was key. Ferrara held regular Zoom meetings to keep unit-owners informed, starting with Friday morning meetings in the first few weeks after the blaze. As work progressed, “we explained the timelines for the different stages of the reconstruction, the goals we wanted to get to, and whether we were meeting them,” he says. Later, they were dialed back to once a month, which continue more than 18 months into the rebuild. The displaced unit-owners, who must pay common charges while they’re living elsewhere, have been appreciative, he adds. “They’re able to see the overall picture, which has helped them get through this difficult ordeal.”

The bottom line for boards? For one, make sure your building has property insurance with adequate coverage for disasters so they won’t wreak havoc on your building’s budget. Another is to make sure there are working smoke detectors and fire alarms so your claim isn’t rejected. “That was all functioning here, and it probably saved lives at the end of the day,” Ferrara says. And while homeowners insurance can’t be mandated, boards should encourage unit-owners to have it. “We suggest that unit-owners put their insurance broker in touch with the building's broker association to make sure they have proper coverage,” he says. “Unfortunately, we've been involved in these kinds of disasters way too often. You can’t be too prepared.”

-Paula Chin