ssociation ’ s
report that can be forwarded to the board for review . Is the property replacement cost being estimated from the correct residential square footage ? Where did the broker obtain the data to make this estimate ? These and other questions about the report can be asked at a meeting with the broker .
Another policy limit that could change on an annual basis is that of the fidelity bond . Did the broker ask for a copy of the income statement , balance sheet and reserve study for review at renewal ? The fidelity bond requirement is typically 3-months assessments , plus reserves . Assessments may change annually . Reserve balances increase with contributions and decrease with capital expenditures . It is important to re-calculate the required fidelity bond limit each year to make sure the CC & R and government lending requirements are met .
Governing Document Review
If the CC & Rs haven ’ t changed , it is expected that the insurance policy written to match those requirements many years ago is still appropriate , right ? Wrong ! Policy language changes , minimum limits required by legislation change , lender requirements change , and the requirements of the CC & Rs should be reviewed to ensure the insurance is adequate . Ask the agent or broker when it was that he / she last reviewed the CC & R requirements . If that review was done when the policies were originally made effective , ask the broker to perform a new review .
Review Loss History
The loss experience of an association is reported in a “ loss run ,” or “ loss history .” It is not uncommon for a loss history report to include a loss that the board was not aware of , especially in smaller associations . A review of the loss history on a regular basis is one way for the board to have a deeper understanding of the insurance program .
It is worth mentioning , that , for the most part , the request for loss history is an indication to the broker that the board is shopping the insurance for the association . It is common for a broker to withhold the loss history reports until the last possible moment . This keeps any competing brokers from working with other carriers to provide quotes because many carriers will not quote without the loss history . However , the broker has an Insurance Code and Civil Code responsibility to his / her client to provide the loss history in a reasonable amount of time which for most would be within ten