Read More »" /> Insurance Pitfalls. Randall Pentiuk; Pentiuk, Couvreur & Kobiljak P.C. | National Cooperative Law Center - Part 2

Insurance Pitfalls

        In obtaining proper coverages, the cooperative wants to avoid duplicate insurance in as much as that is possible in order to save premium dollars. Duplicate coverage might exist, for example, where the cooperative provides certain personal furnishings, like washing machines, and insures them under the cooperative’s commercial package policy. At the same time, nevertheless, sellers take it upon themselves to insure the same machines under their personal dwelling policies as personal contents. Obviously, little purpose is served in the cooperative and the dwellers both insuring four hundred washing machines. This may be an issue that could be more economically settles in the occupancy agreement.

        On the other hand, the cooperative does not want to have gaps in its coverage. The cooperative wants all applicable risks, hazards and exposures to be considered and addressed—either through the purchase of insurance sufficient to cover the exposure or by electing to not cover the exposure, which is known as self-insuring. When a conscious decision has not been made about a risk, hazard or exposure, then what results is known as a gap. Gaps can be very costly and are always upsetting. An example of a gap is a commercial package policy, that is not known to the cooperative, that does not cover windows If a proper reserve was not funded (that is, no self –insurance was completed) and a wind storm, perhaps, breaks seventy percent of the windows on the east face of a twenty-story high rise, replacement could cost hundreds of thousands of dollars and the cooperative may find itself in a position where it cannot repair the structure. Gaps particularly potentially expensive ones, should be identified and addressed.

        The cooperative directors are in the burdensome position of having to make difficult insurance decisions for the cooperative when they often have little experience with the types of risks, hazards and exposures that exist. As a result, cooperatives often rely on the opinions of insurance agents who have little knowledge of legal matters and , usually, do not have significant experience insuring cooperatives. Often, insurance is duplicative or the exposure may be protected through other means, such as indemnity and hold harmless agreements. Perhaps most unsettling is that many cooperative dwellers are unaware of what gaps exist with respect to their own direct property interests and, therefor, rely upon the board of procure appropriate coverages.

Pages: 1 2 3