CONDO ASSOCIATION UNDERWRITING
Understanding Underwriting
What ’ s going on in the insurance business today and what can condominium associations do to keep solid coverage at the best price ?
BY : SEAN M . AHERN , CIC , CIRMS VICE PRESIDENT , JGS INSURANCE
Insurance company underwriters are a rare breed and they have a tough job to do . They ’ ve got to look backward at your condominium association ’ s loss history and then analyze where it ’ s located and how it ’ s built to somehow figure out how it will perform going forward ! That , combined with the current insurance market and how your broker presents your association to the insurance company , is where pricing comes from . Since the underwriter makes the final pricing decision , condominium associations need to know the best ways to give underwriters a warm and fuzzy feeling .
Insurance brokers do the negotiating , and if your broker is doing a good job , you ’ ll see solid coverage and fair premiums . Below we ’ ll discuss how insurance underwriters look at your association and illustrate a few prudent insurance practices .
INSURANCE TO VALUE
As far as insuring buildings , we ’ d all like to insure only what we realistically think we could lose . The chances of a 10-building community losing all 10 buildings in one year is probably remote , especially if the buildings are separated by great distances . But insurance carriers determined long ago that in order to make a profit and pay future losses , insureds would not be permitted to experiment with and determine coverage amounts purchased . Instead , carriers usually require insureds purchase 100 percent of the current replacement cost of their properties .
On a partial loss , insureds who do not comply with this replacement cost requirement will share in the loss as a
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