Obtaining the proper insurance coverage for the association is one of the key duties of property managers and boards of directors. I once was giving a presentation at a national convention at the Condominium Associates Institute (CAI) with a co-presenter, Suzanne Harris. We were discussing the importance of obtaining the right insurance and selecting the right agent.

During her speech, she said that somebody in the audience knew exactly how she went about getting the correct coverage. She explained that she sent out a letter as a matter of practice every year to her agent making certain that the agent read the Association By-Laws and obtained at least the insurance required in the By-Laws. She then pointed to an audience member and said, “you know what happens if you don’t buy the right an insurance coverage and a claim is not paid?” The audience member said, “I sure do. You will make a claim to my E&O carrier, and even sue me for the non-covered item.”

The insurance agent later said that he came to the conference because he learned so much about association coverage during his dealing with Ms. Harris that he thought he could learn more. He said that it was a tough lesson to learn, but an important one—you have to read the Association By-Laws to make certain that at least the minimum coverage is purchased.

Here is a sample of a letter I suggest should be sent to every insurance agent regarding insurance coverage when being purchased: