A Call For All Community Associations!--With An Active Hurricane In The Atlantic Currently Now Is The Time To Review And Refresh Your Disaster Plan

With Danny lurking out in the Atlantic, now is the time to dust off that disaster plan (hopefully there is one in place to dust off from past years) and review it and refresh your memories to make sure it is followed. Let’s face it; it has been ten years since a hurricane has affected South Florida. But don’t let your guard down. While this is predicted to be a less than active season (as it has shown so far) all it takes is one! We have discussed these items before in past years, but I thought now is as good a time as ever for a refresher post.

What should associations and their representatives include in their disaster plans? The following is a general list of some information that may be helpful, but is not meant to be all encompassing. The particular needs of the association and the unique circumstances of its buildings, property, and residents must be considered. For instance, an over-55 community may have different safety concerns when thinking about power outages.

Appoint an “Emergency Coordinator.” A current board member could be appointed, and have a chain of alternate members to fill the role in the event the coordinator is unavailable. This coordinator can take the reins in implementing the plan and dealing with the situation at hand. This individual could also conduct a damage survey with photographs, video, etc.

Appoint someone with authority to contract for emergency repairs. This could be the emergency coordinator. Often following disasters, there will be the need for clean-up and other emergency services. The plan should have a strategy to facilitate temporary repairs and clean-up, in accordance with the association governing documents, and to start repairs as soon as possible.

Emergency telephone numbers. List emergency telephone numbers so they will be readily available when an emergency occurs. Include phone numbers that may be needed after an emergency, such as emergency repair contractors.

Utility outages and equipment failures. Include procedures for dealing with power outages. Elevators are one obstacle in this situation. If the association has an emergency backup generator, its location and operation should be described.

Utility shutoff locations. It is critical to know how to shut off water, gas, and electricity in the community to prevent further damage in the event of a disaster.

Steps to prepare. If the disaster is one where there is advance notice, such as a hurricane, there can be steps residents can take to mitigate damage, such as bringing loose items inside, securing shutters, etc.

Preparing for disasters with a detailed plan can make a difference in minimizing the impact and rebuilding after experiencing a disaster.

Plan for the worst; hope for the best. This is an old adage that has taken shape in various places in the realm of planning. If you have planned for the worst and given it thought, then the element of surprise is hopefully eliminated.

The Importance Of Disaster Response Plans For Associations Cannot Be Downplayed--Part 2

Plan for the worst; hope for the best. This is an old adage that has taken shape in various places in the realm of planning. If you have really planned for the worst and given it thought, then the element of surprise is hopefully eliminated. The destructive impact of tornadoes in the Midwest and Texas cannot be understated. Residents of an apartment complex in Virginia Beach were surprised by when a plane crashed into their buildings; thankfully no one was hurt. Other areas of the country are on the verge of another hurricane and wildfire seasons.

Given the close proximity of unit owners in community associations, the impact of natural disasters can sometimes seem to be compounded. We have previously discussed the importance of disaster plans for associations in the July 4, 2011, post The Importance of Disaster Response Plans For Associations Cannot Be Downplayed. What should associations and their representatives include in their disaster plans? The following is a general list of some information that may be helpful, but is not meant to be all encompassing. The particular needs of the association and the unique circumstances of its buildings, property and residents must of course be considered. For instance, an over-55 community may have different safety concerns when thinking about power outages.

Appoint an “Emergency Coordinator.” A current board member could be appointed, and have a chain of alternate members to fill the role in the event the coordinator is unavailable. This coordinator can take the reigns in implementing the plan and dealing with the situation at hand. This individual could also conduct a damage survey with photographs, video, etc.

Appoint someone with authority to contract for emergency repairs. This could be the emergency coordinator. Often following disasters, there will be the need for clean-up and other emergency services. The plan should have a strategy to facilitate temporary repairs and clean-up, in accordance with the association governing documents, and to start repairs as soon as possible.

Emergency telephone numbers. List emergency telephone numbers so they will be readily available when an emergency occurs. Include phone numbers that may be needed after an emergency, such as emergency repair contractors.

Utility outages and equipment failures. Include procedures for dealing with power outages. Elevators are one obstacle in this situation. If the association has an emergency backup generator, its location and operation should be described.

Utility shutoff locations. It is critical to know how to shut off water, gas, and electricity in the community to prevent further damage in the event of a disaster.

Steps to prepare. If the disaster is one where there is advance notice, such as a hurricane, there can be steps residents can take to mitigate damage, such as bringing loose items inside, securing shutters, etc.

Preparing for disasters with a detailed plan can make a difference in minimizing the impact and rebuilding after experiencing a disaster.

The Importance Of Disaster Response Plans For Associations Cannot Be Downplayed

One of the best defenses against natural disasters is to have a disaster plan in place. Depending on where your association is in the United States, there are numerous disasters, such as earthquakes, wild fires, tornados, floods, and hurricanes that residents potentially face. Emergency planning has become an essential skill for association managers, who should understand what types of disasters are likely to occur, develop disaster response plans, practice them, and discuss them with the residents.

On June 3, 2011, Yahoo News posted a story of a recent example from this spring’s active tornado season. The tornado sirens blared in a 70-unit St. Louis condominium building, and the residents went straight to the building’s underground windowless garage and huddled in the center. They had a response plan in place and had been made aware of the plan organized by their experienced property manager. Without such a disaster plan, the April tornado that carved a 22 mile track of destruction through the city, damaging 200 homes and leaving people without power, would have had a greater impact on the community.

It is important for association managers and board members to commit to a disaster plan, communicate it to residents, and test it in the community. There are various certification courses available to those in the industry interested in further information on this topic. There is even a National Board of Certification for Community Association Managers (NBC-CAM), which is an independent board that develops certification (known as the CMCA – Certified Manager of Community Associations®) and standards for community association managers.

Hurricane Season Coincides With Important Notice Changes In Florida

As most of us know, June 1 was the beginning of the Atlantic Hurricane Season. Experts are again predicting a “highly active” year, and some opine that more than ten major hurricanes are possible. Coincidently, June 1 also came with significant changes to the laws regarding property insurance in Florida. As Jeremy Tyler mentioned on Monday, even the statute of limitations for filing a property damage lawsuit has been changed to five years from the date of the storm.

Knowing and understanding the statute of limitations is extremely important for associations, however, there are other new deadlines imposed by the recently implemented Senate Bill 408. Failing to report a claim may be grounds for a denial of benefits by an association’s insurer, despite the fact that it was brought within the statute of limitations mandated five years.

In regards to reporting requirements for hurricane damage claims, the new law provides:

Effective June 1, 2011: A claim, supplemental claim, or reopened claim under an insurance policy that provides property insurance, as defined in s. 624.604, for loss or damage caused by the peril of windstorm or hurricane is barred unless notice of the claim, supplemental claim, or reopened claim was given to the insurer in accordance with the terms of the policy within 3 years after the hurricane first made landfall or the windstorm caused the covered damage.

For purposes of this section, the term - supplemental claim or ―reopened claim means any additional claim for recovery from the insurer for losses from the same hurricane or windstorm which the insurer has previously adjusted pursuant to the initial claim.

While all insurance policies require notice of a loss to be provided, an insurer generally cannot refuse payment of a claim based on a late notice defense unless it can show that its investigation was somehow prejudiced. With the enactment of the new property insurance laws, Florida associations should be very mindful of the three year reporting deadline now required. Failing to do so, may result in the denial of a valid claim.

The important lesson for associations is to report claims early, even if the damage seems minimal. If you think there is a possibility of damage to your property, contact your broker, agent, or insurer as soon as possible and let them know.

Aside from filing a claim immediately, an association should hire its own experts to determine the extent of damages and the costs of repair. Insurance adjusters and experts are often overworked after a large hurricane and may not take the time to fully and properly investigate your loss.

Finally, if you disagree with your insurer’s determination of damage or the amount of loss, you should let them know immediately and take steps to rectify the dispute. Waiting to request that the claim be re-opened may result in a bar to recovery under the new law, as it applies to all claims -- including supplemental and re-opened.

Citizens Policyholders May See Rates Increase In 2011

Although Florida has not seen a major hurricane touch its shores since Hurricane Wilma in 2005, Citizens Property Insurance Corporation may be raising rates on many of its policyholders. Earlier this month, Insurance Commissioner Kevin McCarty approved additional rate increases that will affect thousands of insureds, including many condominium associations.

Citizens is the state's largest residential insurer, issuing policies covering over 1.2 million properties in Florida. By law, Citizens' rate increases are limited to 10% per year. This amount can be increased, however, to increase funding in the Florida Hurricane Catastrophe Fund.

While some policyholders may actually see rates slightly decrease, many will see the opposite. "High-Risk Accounts" (policyholders along the coastal areas that are more prone to hurricanes) and "Commercial Lines Accounts" will all see rate increases in 2011. As most condominium property falls into one of these two categories, associations should anticipate their premiums going up shortly.

Commercial Lines Accounts, including associations that are not in traditionally hurricane prone areas, will see an average rate increase of 8.1% in 2011. Associations in "high risk" areas along the coast will likely see its windstorm policies increase by an average of 11.3%.

As Citizens was created to be an "insurer of last resort," premiums are statutorily increased over other private insurers. Therefore, these rate increases will make already expensive policies more costly.

Citizens serves an important purpose. It provides vital property insurance to individuals, associations, and businesses when private insurers will not. Thankfully, with the absence of hurricanes since 2005 many private insurers, with less costly rates, have come back into the market. Associations that are paying large premiums to Citizens, or any other carrier, should check with their agent for a more cost effective alternative. You may be surprised to find that you can find the same coverages for significantly less than you are paying now.

How To Protect Your Roofing Investment

(Note: This guest blog is by Steve Thomas, president of Roof Leak Detection Company, Inc., a Certified Testing Laboratory located in South Florida which specializes in testing and consulting services for commercial and industrial properties).

The past few years have taught building owners, property managers, and condominium managers an uneasy lesson about roofs. Most have discovered that if their roofs fail, they may still face a fight with their insurance company to recoup their losses. This dilemma can be avoided in many instances if one simple rule is followed: Document the condition of your roofing system.

What steps should a condominium association take in documenting the condition of its roofing system? It is my recommendation that, at a minimum, if your building has a sloped roof, you should have photographic documentation of your roof from all angles. At the very least, this will prove that your roof was intact prior to any storm or other damage. It is further recommended that a professional (roof consultant, engineer or architect) evaluate the condition of your roofing system assembly. This will allow you to make any recommended or necessary repairs prior to hurricane season. These repairs should be documented, and you should retain a file of all roof inspections and repairs.

Flat roofs are a different story. For a flat roof, at a minimum, you should have a roof moisture survey performed by a licensed, certified roof testing company. This moisture survey will provide you with scientific data showing the condition of your roof. Speaking from my own experience, in every instance where my company performed a moisture survey (prior to the storm event) on a roof that then failed, the insurance company accepted the report and the long litigation process was not necessary. Why is this? The answer is two-fold.

First, a licensed, certified roof testing company is not a roof contracting company or material manufacturer. The opinion of a roofing testing company is considered unbiased and therefore lends more credibility to the report.

There are three different methods of roof moisture surveys that can be performed. It is very important to have the proper type for your roofing system conducted. Not all moisture survey methods are the same, and many types of moisture surveys are not applicable to many roofs.

1. Infrared Method: Infrared cameras have come a long way in the past 12 years. Many of the cameras have a high resolution that can distinguish wet areas of insulation. It is my opinion that infrared cameras, although useful, are not the best way to measure moisture infiltration into many types of roofing systems. Infrared measures surface heat differential; wet insulation will hold heat longer than dry insulation thus allowing the infrared image to locate the trapped moisture. The biggest drawback to the infrared method is that many of the roofing systems do not have the type of composition to render the infrared image effective.

The following are examples of the types of roofing systems that should not be analyzed using an infrared camera.

a. All roofing system with light weight concrete. The moisture in light weight concrete will migrate to the bottom of the roof and thus become undetectable by the infrared camera. There is no surface temperature differential, so the infrared method is not effective in finding trapped moisture on any of these types of roofing systems.
b. Reflective coated roofing systems. A reflective coating or white surfaced roof does not sufficiently heat up during the day. This will inhibit the wet insulation from heating up so it can be recognized by the infrared image.
c. Building with multi elevations or roof top equipment that may shade areas of the roof for extended periods of time. These shaded spots do not sufficiently heat up the insulation so it can be identified by the thermal image.
d. Any building with two roofing systems. The infrared only sees surface heat differential.

2. Nuclear Method: The Troxler Nuclear Moisture Meter is used to detect moisture as deep as 8" into the roofing system in roughly a 10 foot x 10 foot square (the grid can be smaller). It will peer through all layers of insulation and can be used on all types of roofing systems. On projects where one roof has been installed over another or on multi layered systems, a nuclear moisture survey is the only moisture detection method that will accurately locate moisture located in the bottom layers of insulation installed to the deck.

3. Electrical Capacitance Method: This method is best used on single ply roofs (not E.P.D.M. Rubber though) with no insulation over a wood deck. The electrical capacitance meter in our opinion does not have the depth capability to make an accurate survey of trapped moisture. Furthermore, aluminum-coated built up and modified roofing should not be tested using this method.

The second reason for performing a moisture survey prior to a storm event is that the moisture survey can also be used as a guide for making any necessary repairs to the roof. Performing a moisture survey will also show the insurance company that you are performing regular inspections. This is important because the condition of a roof can change from year to year. By performing this evaluation, it should be clear to the insurance company that you are maintaining your roofing system as required by all roofing material manufacturers.

A question my company gets quite often is, “Why not have our roofing company do the evaluation?” My answer is quite simple. Would you put a band-aid on a broken leg? Of course not! Repairing a flat roof without first performing a moisture survey is foolish and could cost 20 times the amount of the moisture survey. The moisture survey will pinpoint the exact trouble areas so that an accurate repair can be made, costing you thousands less.

Another dilemma for all building owners is their belief that because their roofing system is relatively new annual inspections are not necessary. Nothing could be further from the truth!

There are three phases of evaluation after a hurricane. The initial damage assessment, the recommendation process, and the one we see most -- “my roof blew off and the roofing contractor put a new roof on my building” phase. The last phase lasts the longest and here is why. After a hurricane, many contractors are often understaffed and are forced to hire unskilled labor. Material is scarce and there are many damaged roofing systems. This leads to disaster. My company’s personal experience is that we are finding, on average, two roofs a week that were improperly installed, did not have proper local county inspections, and were done by unlicensed contractors.

If you have had a roof system installed in the past two years, I highly recommended that the roof be evaluated. Even a bad roof can last two years. The skilled roofer will pay close attention to flashing details. An unskilled one will splash roofing cement on it and that can last two years. Don’t think it is just small unknown contractors. I have seen many of the larger established contractors have the same problem because of the immense amount of roofing work.

A proactive approach to the most important component of your building (the roof protects all the contents inside) can save countless dollars and monumental headaches. Insurance companies are always looking for a way OUT of paying a claim. Do the best you can to deny them this opportunity. Don’t be penny-wise and pound foolish. The cost for this type of documentation is miniscule compared to the cost of high deductibles, a new roof, attorney fees, or any associated storm-related cost. I can attest to the fact that if every building owner took the approach of documenting the condition of his roof there would certainly be less confusion for all parties involved should another catastrophe occur.

Steven M. Thomas CRI-RC
President
Roof Leak Detection Co., Inc.

Hurricane Preparedness for Insurance Coverage

With Tropical Storm Bonnie passing through South Florida this past weekend, I thought this would be a good time to address the importance of hurricane preparedness. There are plenty of resources and guides for preparing property for a disaster, but I want to focus on preparing condominium insurance coverage.

With respect to insurance, the first and most important preparatory step is to verify that your insurance policy is active and in full force. This includes ensuring that premiums are paid up to date, making sure that insurance coverage is adequate to protect your property, and verifying that all pre-loss or preventative measures required under the policy have been complied with. See Perdido Sun Condominium Ass’n, Inc. v. Nationwide Mut. Fire Ins., 545 F. Supp. 2d 1225 (N.D. Fla. 2008). It would be wise to contact the association’s insurance agent and attorney to perform a thorough analysis of the policy to ensure coverage will be available in the event of a storm.

Before a storm is also the best time to ensure that any previous insurance claims have been handled to the full extent possible to avoid complications that new storm damage may bring. See Royale Green Condominium Ass’n, Inc. v. Aspen Specialty Ins. Co., No. 07-21404-CIV, 2008 WL 2397623 (S.D. Fla. 2008). If previous insurance claims have been made, make sure that the repairs were made appropriately, and that documentation for the repairs is available. If any previous insurance issues remain unresolved, contact your insurance agent and try to resolve them as soon as possible.

It is also important to make sure all-important records and documents are in a safe place, protected from water, wind, and fire. Insurance policies, applications, prior claim histories, as well as other association contracts, financial records, and any other records which may be needed to support an insurance claim should all be accounted for and protected adequately. Photographs and videos of the property that were taken before a storm should be included with insurance documents to provide evidence of the pre-loss condition should a storm cause new damage. Scanning paper documents into an electronic format such as Adobe Portable Document Format (PDF) provides an efficient backup for paper documents.

Electronic documents should be backed up and stored in an offsite location. For small to medium amounts of electronic documents, there are plenty of online storage resources that are easy to use, inexpensive, and provide access to those documents quickly from any location with Internet access. If electronic documents have been scanned from a paper source, Optical Character Recognition (OCR) software will help make those documents easily searchable to give you quick access to the right document you may need after a storm.

Preparing your insurance coverage for a hurricane is just as important as preparing your property. The above tips should should help organize and safeguard materials needed if a disaster strikes. If you need a good resource for information on protecting property from a storm, drop us a line and we’ll be happy to help out with that as well.

Failing To Obtain Regular Appraisals Can Hurt Associations After A Large Loss

The second named storm of the year has crossed Florida, and it will only be a matter of time before another tropical system strikes the state. While there are many problems that an association can face after a loss, few are harsher than the effect of a coinsurance penalty that reduces the amount paid on an otherwise valid claim. Many policies, especially large commercial polices, contain coinsurance provisions. Unfortunately, many directors and managers do not understand what they mean or the effect that they can have.

Coinsurance provisions come in all shapes and sizes, but the most common are 80, 90, and 100% coinsurance provisions. These provisions are fairly easy to understand. Because an insured is supposed to carry enough insurance to replace the entire property after a loss, insurers will reduce the amount of coverage they provide if this is indeed not done. An 80% coinsurance provision means that an insured must have coverage for 80% or more of the replacement cost value at the time of the loss. Likewise, with a 100% coinsurance provision the insured must have coverage for 100% of the replacement cost value at the time of a loss.

If a property does not have enough insurance coverage to equal or exceed the coinsurance provision, the insurer may reduce the amount of recovery even if the cause and amount of the loss are undisputed. This is a harsh effect and may leave an association without the funds to properly repair the buildings.

There are two basic ways that an insurer will reduce payments under coinsurance provisions. First, an insurer may only pay the actual cash value of the damage instead of the replacement cost normally covered under the policy. While this may not seem too harsh for newer properties, failing to recover the depreciation can be a huge problem for older associations.

The second, and more common, coinsurance provision states that if the property is not insured to the required percentage, any loss can be prorated to the percentage of the insurance purchased. For example, if a policy had a 100% coinsurance provision, the building would need to be insured to 100% of its replacement cost value at the time of the loss. If only $100,000 worth of insurance was purchased but the Replacement Cost Value of the property was $200,000, the insurer would only be liable for 50% of the loss.

Thus, if there was a policy limits loss of $100,000 dollars in the above scenario, the insurance company would only be required to pay $50,000 because the property was only insured to 50% of its replacement cost value.

Many associations carry high coinsurance provisions for a number of reasons. Higher coinsurance provisions reduce premiums, which is enticing to many associations looking to save money in tough financial times. Also, many associations cannot imagine a total loss and believe that there is no need to fully insure the property. Others may not even know that the provision is in their policy. No matter what the reason, associations should always check the amount of the coinsurance provision and ensure that they are adequately covered.

If the association policy includes a coinsurance provision, it should be between 80 and 90%. Having a 100% coinsurance penalty is almost never recommended. Also, no matter what your coinsurance provision says, an association should make a habit of having professional appraisals performed on a regular basis. Having a qualified and unbiased third party determine the replacement cost of the property every few years will ensure there is adequate insurance on the property.

June 1st Is The First Day Of Hurricane Season: Is Your Association Prepared?

As I mentioned last Friday in Hurricane Expert Revises Prediction, experts are predicting one “hell of a year” for hurricanes. While the Atlantic has not picked up yet, we have already seen the effects of Tropical Storm Agatha, which killed over 100 people in Central America and caused a large amount of property damage. This should be a wakeup call to complacent associations and should encourage those who have not begun preparing for a potential storm to do so.

The most important thing that an association can do before a hurricane forms is to have a plan in place in case of an emergency. Often, associations are not prepared to handle the effects of a hurricane and do not get a game plan together until the storm is barreling towards them.

Don’t wait until it is too late; there are many precautions that you can take now which may minimize damages and help limit the amount of time it takes to get back up and running.

First, check with your agent to make sure that your insurance policy is in effect and that you have made all necessary payments. If there is a problem, make handling it your first priority. Check both the windstorm and flood insurance policies, as flood is typically an excluded coverage under normal commercial insurance policies. There is no time to procrastinate; if your association is not properly covered, board members and managers may be subject to liability if a loss occurs.

Next, begin formulating a plan for dealing with an oncoming hurricane. Speak with maintenance and other workers about steps that need to be taken before a storm arrives. Trees and bushes should be trimmed to reduce the possibility of damage from debris hitting the building. If you have satellite phones or other means of communication when phone systems are down, make sure that they are charged and distributed to the necessary individuals so that you can make contact during and immediately after a storm. Also, check any damage prevention devices, such as hurricane shutters, to make sure they are in working order

Have a discussion with employees regarding their specific jobs if a hurricane threatens. One important precaution is to make sure that potential projectiles are brought inside or tied down. Pool chairs, trashcans, signs, etc., can turn into missiles during a hurricane and could lead to property damage and injury if not properly stored or tied down.

Make sure that financial records and important data are stored in a safe place or backed up on an offsite server. After a loss, insurers will likely require much of this information in the investigation of the claim. Having this material backed up and safe can help the claims process go more smoothly and can help an association quickly get back on its feet.

Speak to vendors and contractors that you have a relationship with and make them aware that you will be contacting them immediately after a loss. Many times, hurricanes cause such widespread damage that contractors and water remediation companies are booked for weeks or even months. Contacting them early can help ensure that you get the help you need to mitigate damages and make repairs as quickly as possible and avoid delays.

Finally, create an emergency phone list for all relevant employees. If you can contact them as soon as it is safe and have them back to work cleaning up after a storm, you will get the work done more quickly. The extra expense you incur in paying these individuals may be recoverable under your association insurance policy.

Having a plan in place can make a world of difference after a loss. These preemptive steps can help ensure that your building promptly repaired and operational after a loss.