Insurance

(00:00:00) Speaker: It's time for AMG’s Community Leaders Series Podcast Edition. Over the last three decades, AMG has worked to make the role of community leaders more effective and less of a headache. Seminar topics are a response to what our executive board members have requested.

(00:00:16) Paul K. Mengert: Hi, I'm Paul Mengert and this is the AMG Community Leaders Series podcast on insurance. I want to welcome everybody. Our topic for today is about Community Association Insurance. And I'm pleased to have with me, AMG's Director of operations for the Triad area, Candace Cole, as our special guest. Welcome, Candace.

(00:00:41) Candace Cole: Thanks, Paul.

(00:00:43) Paul K. Mengert: Candace holds the AMS and CMCA designations. She has impeccable leadership skills which have been showcased through her time in our industry. She's received key administrative training during her time at work in the United States Marine Corps, and we certainly are pleased to have Candace as part of AMG and as part of this Community Leaders series. So, Candace, welcome.

(00:01:13) Candace Cole: Thank you, Paul. I'm very excited to be here.

(00:01:15) Paul K. Mengert: Candace, you may know that we earlier recorded a podcast with Andrew Bateman about all kind of aspects of insurance, but I really wanted our community leaders to have an opportunity to hear from you on something I know is very important to you, and working with and coaching our community leaders on insurance. So, let's get right to it. Tell me what types of insurance you particularly things community leaders and board members should be discussing with their communities Insurance agent?

(00:01:52) Candace Cole: Well, there really are typically six that they should be discussing. Now Not all of them are going to apply to every situation or association, but it's definitely a few that should be on their mind. There is the general liability, property insurance, umbrella policy, crime and fidelity, directors and officers, which is very important, and worker's compensation as well.

(00:02:19) Paul K. Mengert: Worker's compensation? Well, a lot of associations don't have employees. Why would they need worker's compensation?

(00:02:25) Candace Cole: Worker's compensation can also cover volunteers for the association. So, this is definitely something that they would want to discuss with their insurance agent.

(00:02:34) Paul K. Mengert: And maybe their attorney, also to make sure they have that right. And of course, there you know, one thing I've learned in this industry is there is no one size fits all. That's both good and bad. I mean, it's good that associations all have the opportunity to have their own personality, and independent discretion and control. But the bad thing is there is no one size fits all solution. And boy, that's particularly true when it comes to insurance. Talk a little bit about why they might need crime and fidelity insurance. What would that cover?

(00:03:09) Candace Cole: Crime and Fidelity covers the actual money and dollars that are in their operating in reserve account. So, you know, from embezzlement or stealing, quite frankly. So, this is something that they would definitely want to have or look into with their agent.

(00:03:24) Paul K. Mengert: And I know a few examples that I've been given about the crime and fidelity is if somebody in some far-off land, you know, say Siberia or something, hacks into the bank account, you know, whose responsibility is that going to be? And the answer is it probably depends. Like every answer that you give, the attorney will probably depends. But if you're an association director, you sure as heck want to make sure you have insurance. Just like if you're in a car wreck. It may be the other guy's fault. But if you don't have insurance, you could be left holding the bag while this all gets figured out. I know there have been some cases of. Homeowners who aren't on board, who have impersonated the board and gone into a bank and changed the names on the signature cards and withdrawn money. So, I guess that's another example of how, you know, nefarious things could happen to the association funds. And I know one of the things that probably everybody's heard of, but I know even one of the local law firms fell victim to this where somebody texts or emails the board president and says, hey, I need you to pick up some gift cards for me or something. And then if the president or treasurer gets lulled into this and listen, I know what happens to intelligent people, it happened to some lawyers we know. You know, that would be another example of the kind of thing that might be covered by certain kinds of crime and fidelity and cyber insurance. And, you know, holy cow. I know a lot of association software. We don't need any of that. We've got a management company and we've got a bank, we've got a this, that and the other. But at the end of the day, it's their money and it's probably their responsibility to carry insurance on it. And the good news on the the cyber and the crime, the fidelity, those kind of coverages, they tend to sometimes be included and other times cost very little over half. So, this is not something that's going to cost you, you know, thousands of dollars a year to make sure you're protecting everybody's money. And the workers comp, by the way, can be the same. It's often based on how much you pay out with a pretty small minimum premium. Well, Candace, I know one of the things I've heard you talk to a lot of homeowner groups about it. I do want to at least just touch on that is what about directors and officers insurance and, you know, talk about why not all directors and officers insurance is created equal?

(00:06:06) Candace Cole: Well, there's definitely two kind of types you can have, which is a standalone policy and then an endorsed policy like on your general liability policy, which kind of as an add on. And there really are some differences in these where the stand-alone policy has more robust coverage. Essentially, it'll cover a lot of different claims that perhaps the endorsement would or would have as an exemption from their policy. And a lot of those are things that are the most popular lawsuits or, you know, to be brought against the board. So it's really something that we strongly encourage all association board members or associations to have and would definitely be something to get a quote from for your inserts insurance agent. I'm not sure I would serve on a board without that standalone policy in place.

(00:06:58) Paul K. Mengert: Yeah, I know I would not. One of the things that I've heard you mentioned before is the discrimination lawsuits and that or discrimination claims. And I know that's one that associations across the country are seeing more and more of. I know you've had some experience with that, the associations that have the coverage. Basically, the insurance company appoints a lawyer who handles everything, without a lawyer, without the coverage, without a lawyer. What happens to the groups that face these these kind of allegations that often are totally unfounded? I'm not saying they're always unfounded with total you know, sometimes they're totally unfounded. What does a group without the insurance have to do?

(00:07:46) Candace Cole: Unfortunately, the association and the board themselves can be personally liable for the cost of a defense for the punitive damages, if any, awarded by the judge. So even if it is a completely unfounded allegation and it gets dismissed, there is still a cost to defending the association and the board themselves in court. And that's something that they would be liable for.

(00:08:09) Paul K. Mengert: Yeah, and sometimes we see these cases where they name the board members individually and then without the insurance coverage, the board members may just have to be trying to figure this out on their own. And it can be pretty complex. So, you know, I would definitely feel better knowing that I had this coverage serving on a board because, look, anybody can make any kind of claim. And, you know, I think the cost of, you know, dealing with one of these things that gets dismissed at a fairly early level is probably 10 or 15, sometimes even $20,000 because of the paperwork and the appearances that are needed. You know, just kind of knowing the system, these things can become can become quite complicated. So, the takeaways here are: Have a good discussion with your lawyer. You listed out six things, I know. I think we're going to have an attachment that goes with that. This podcast lists those, so we're going to go ahead and jump into an HOA news break here and we'll be right back with Candace Cole, the Triad area director of operations for AMG.

(00:09:27) Speaker: And now it's time for your AMG Community Leader Series Newsbreak.

(00:09:31) Newsbreak: New developers in Rutherford County, Tennessee, are looking to limit homeowners ability to rent out their homes on third party sites like Airbnb by imposing rules through the HOA. Over 1900 people in Tennessee alone were denied rentals last Halloween after Airbnb introduced their party ban, which added more restrictions on house parties to prevent further rental complaints from neighborhoods. Airbnb has also prohibited guests without a history of positive reviews for making one Night Reservations an entire home listing. This, of course, will not eliminate the ability for a homeowner to rent out their homes completely, but it does eliminate people from buying a home with the sole purpose of turning it into a rental. Let us know your thoughts by leaving a comment on HOACommunityleaders.com.

(00:10:15) Paul K. Mengert: We're back. I'm Paul K. Mengert, and we have the honor of having Candace Cole, the AMG director of Operations, with us discussing Association insurance. And Candace, I just I think it's just good for all association leaders to take a few minutes and reflect on the association coverages. How often do you recommend this should be done?

(00:10:38) Candace Cole: Well, it can be, of course, Paul. You know, one size doesn't fit all. So it can really depend on the type of insurance you have and the type of coverage that you need. If it’s, you know, a single-family community with no property and no claims, you know, every 3 to 5 years may be acceptable. If you have claims, you have property, it's a condo or a townhome that covers structures, this is something you'll probably want to review yearly with your insurance agent, especially if there have been claims or you've had an increase in property values. Your coverage may need to be updated and changed. So, this is something that you should be doing quite regularly, not only to get the best price for coverage, but also to make sure that what you are covering is what you need to have covered.

(00:11:30) Paul K. Mengert: And I know that AMG strongly recommends that we have the community have at least an annual conversation about the insurance coverage and often a good idea to have that with your insurance agent or maybe your lawyer just to make sure nothing has changed. And, you know, sometimes there are court cases or new laws or new coverages or new exposures are really important to sit down and look at this, you know, in my opinion, once a year, it doesn't mean you're going to make changes, but it just ought to be something that's a conscious process.

(00:12:06) Candace Cole: Definitely. And you also I mean, it's good to know how much your premiums are going to be for the next year as well. So, you know, I know we're not talking about budgets for budgeting purposes. It's just good information to have all the way around.

(00:12:18) Paul K. Mengert: Well, hold that thought a minute. We have another newsbreak coming up from the AMG Community Leaders series. We're talking with Candace Cole, the AMG director of operations for the Triad area today. And we'll be right back.

(00:12:34) Speaker: And now it's time for another AMG Community Leader Series Newsbreak.

(00:12:39) Newsbreak: A community in Northampton, Massachusetts recently celebrated their 150 year anniversary of its founding. Laurel Park is known for being in a centric neighborhood and home to unconventional thinkers. For a century and a half, they prided themselves on supporting free speech and free thinking throughout their community. State Representative Lindsey Sabah Dosa presented the HOA with a House resolution congratulating the community on its anniversary at a celebratory ceremony in the Tabernacle. To read more about Laurel Park and its historical journey, visit HOACommunityleaders.com.

(00:13:11) Paul K. Mengert: Welcome back folks I'm Paul K. Mengert discussing insurance with the AMG director of operations for the triad area, Candace Cole. Candace, again thank you for joining me today and helping our community leaders think through some of their insurance issues. I know we already talked about the standalone DNO and why that is so important, but I just want to touch one more time on the DNO that comes with some of the package policies, maybe give them some coverage, but it may just not be as thorough. And, I know when you look at this, there are quite a few companies that offer really enhanced director and officer coverage. And of course, it's different for every association. But can you give our listeners some idea of how much that might cost?

(00:14:08) Candace Cole: It really depends on the size of your community, what type of community you have. But, you know, I mean, it could be as simple as, you know, 1200 to $2000 a year for this coverage when, like you said before, just defending a claim could be upwards of 10 to $20000. I mean, Paul, we had a situation at one of our communities where we were getting ready to open the pool during COVID. So, we were making sure we had all of our coverages in place, we had our directors and officers standalone policy bound on a Friday, and unbeknownst to us, there had been a fair housing claim placed against the Board of Directors and a few other individuals in the community, and we received that on Monday. Now, because we had no knowledge of the claim prior to that, it was 100% covered by the standalone director and officers’ policy. So, it was really kind of a learning moment for myself, making it real, real life. So, it was definitely something that struck home with me saying that this is definitely something we need to have in place for our communities.

(00:15:19) Paul K. Mengert: Of course. And without getting into too many of the specifics, I think that's where homeowners were shooting at each other across county lines and a very a very complicated case. And, you know, thank goodness they did bound the, you know, the right insurance coverage in advance. Of some of this rearing its head, As I remember, ultimately, all of that was dismissed against the association and they were found to have no liability, but it still would have cost quite a bit of money to have to have worked through all that.

(00:15:56) Candace Cole: Yes.

(00:15:57) Paul K. Mengert: By the way, this isn't insurance, really, but it's I think it is. I think it's an opportunity. We might want to mention this when an association hears allegations of discrimination. We always think it's a good idea that they should call their attorney and discuss what obligations they may have, because surprising to many, even if it's two homeowners having a fight, the association may need to do something to protect the rights of members who fall into protected classes. So AMG can't tell you what's right or wrong, but we can tell you that that's sure as heck a good thing to discuss with your attorney and just make sure we're doing everything we can.

(00:16:38) Candace Cole: I agree, Paul. I don't think the classic this is a neighbor-to-neighbor issue would suffice and some of these discrimination allegations that we hear.

(00:16:48) Paul K. Mengert: Well, Candace, we're going to take our final newsbreak now. And this time we're going to take our listeners out to California.

(00:16:55) Speaker: And now it's time for our final AMG Community Leader series Newsbreak.

(00:17:01) Newsbreak: The City Council in Indian Wells, California, unanimously approved a funding match for the Coachella Valley Water District rebate program, with California in a severe drought. The push for desert homeowners to conserve use on their lawns is imperative. This program will offer the residents money to switch to a more drought tolerant landscaping procedures. The council agreed to match $500,000 in funding, allocating 300,000 of a total funding for residential projects with 200,000 for the HOAs. These conversion projects can be up to 5000 square foot of turf for residential properties and up to 15,000 square foot for HOA properties. Find out more by visiting HOACommunityleaders.com.

(00:17:40) Paul K. Mengert: Again, as you know, I know from time to time we have suggested that our communities reach out to their municipality and see if they can get some help. And this case out in California sounds like an example where they were successful.

(00:17:55) Candace Cole: I agree. It's quite amazing to see.

(00:17:58) Paul K. Mengert: Well, Candace, I know we're coming to the end of our time on this important topic. I'd just like to ask you to maybe kind of end where we started, which I know you rattled off a list of coverages. Let's go back through those again and just give as you go through them. Just give a word or two about an example of what each one means. And of course, all circumstances are different. You should always discuss these things with your insurance agent. But this is Candace Cole, the director of operations for the Triad. Tell us what these coverages might look like.

(00:18:34) Candace Cole: All right. So, we have general liability. This is something I think everybody is familiar with. If somebody trips on the sidewalk or gets hurt on common area, we have property insurance. So, this covers like your physical property. A tree falls on your clubhouse or your monument sign. Those can be extremely pricey to repair or replace. We have an umbrella policy which this is a fairly inexpensive way to increase the liability limits of your coverage on your policies. Worker's compensation, like we talked about earlier. This covers workers and volunteers, crime and Fidelity. This is your actual dollars, your money, in your bank accounts. Same with cyber and security, which I believe is becoming ever more present and relevant as we move towards a more, you know, technological society. And then, of course, my ever favorite and, you know, insurance policy that I talk about all the time, directors and officers, you definitely want to check into that standalone policy. So it kind of protects the board of directors, you know, the association, from any lawsuits that may be brought against them.

(00:19:50) Paul K. Mengert: Well, very good. And I certainly think this is helpful to community leaders. Please do take a look at the attachment that we have that outlined some of these important coverages that Candace has been talking about. And most of all, reach out to your community manager and ask to schedule time for the association's insurance agent to jump on a Zoom call with your board or maybe meet for coffee. Whatever works for your community might be a good idea to make that the same time you'd have the attorney review your rules and regulations and just make sure you're up to date on everything. So, we appreciate the service of the of the board members and we just want to do our part to try to keep you current on everything and hopefully up to date on all the important insurance coverages.

(00:20:48) Candace Cole: Thank you, Paul. It's been a pleasure.

(00:20:49) Paul K. Mengert: Well, thank you. And thank everybody for listening to our episode of Community Insurance. A special thanks to AMG's, director of Operation for the Triad, Candace Cole, for speaking on insurance. I am Paul K. Mengert, and this is the AMG Community Leaders Series Podcast Edition. To listen to our other podcast episodes or to check out additional 2022 CLS materials. Please go to HOACommunityLeaders.com. Have a great day.

(00:21:20) Candace Cole: Bye everyone.

(00:21:21) Speaker: Thanks for listening to AMG's Weekly Leaders Series Podcast Edition. Find more information on this episode online at HOACommunityLeaders.com.

(00:21:30) Speaker: This podcast is a production of Bg ad Group. Darren Sutherland Executive Director. Jacobs Southerland Director. Matt Golden News Director. Producer. And Jason Genterola, Audio producer. All rights reserved.

Key Notes:

• It is important to know the different types of insurance offered to Homeowner’s Associations.

• Know that ‘one size fits all’ insurance is NOT relevant for Communities and Associations.

• Make sure you reflect on your coverages every year to keep the Association safe and guarded against any situations that could arise.

To access our free Insurance Solutions worskheet, click here.

Developers look to limit loud parties at short-term rentals

New developers in Rutherford County, TN are looking to limit a homeowner’s ability to rent out their homes on third party sites, like Airbnb, by imposing rules through the HOA. Over 1900 people in Tennessee alone were denied rentals last Halloween after Airbnb introduced their “Party Ban” which added more restrictions on house parties to prevent further rental complaints from neighborhoods. Airbnb has also prohibited guests without a history of positive reviews from making one-night reservations in entire home listings. This of course will not eliminate the ability for a homeowner to rent out their homes completely, but it does eliminate people from buying a home with the sole purpose of turning it into a rental.

A modern-day Chautauqua: Laurel Park will celebrate its 150th anniversary with a range of events

A community in North Hampton, Massachusetts recently celebrated their 150-year anniversary of its founding. Laurel Park is known for being an eccentric neighborhood and home to unconventional thinkers. For a century and a half, they have prided themselves on supporting free speech and free thinking throughout their community. State Representative, Lindsay Sabadosa presented the HOA with a House resolution congratulating the community on its anniversary at a celebratory ceremony in the tabernacle.

Calif. city incentivizes drought-tolerant landscaping

The City Council in Indian Wells, CA unanimously approved a funding match for the Coachella Valley Water District Rebate Program. With California in a severe drought, the push for desert homeowners to conserve use on their lawns is imperative. This program will offer their residents money to switch to more drought-tolerant landscaping procedures. The council agreed to match $500,000 in funding, allocating $300k of the total funding for residential projects, with $200k for HOAs. These conversion projects can be up to 5,000 sqft of turf for residential properties and up to 15,000 sqft for HOA properties.