Finance & Legal minutes: 2003-05-05

Minutes:

Draft minutes
Finance & Legal
5/5/03

Attendance: Kelly, Judith, Dale
With special guest: Barbara Young, State Farm


Agenda

Insurance presentation, State Farm

She handed out two brochures and addendum.

She does carry Georgetown condo as well as other condominiums locally. Reference: we can call her and she'll give us the name of the president there.

Quote is stapled in back of the sales brochure. Two potential differences: did we get credit for sprinklers? She'll look into this.

Sunward is insured by state farm. She talked to Dale (SW's agent). They pay $8,657, but that is because after 3 years they get a discount (20% if 3 years no claim). After 3 years and renew, 3-5 years you get a 5% discount. After 6+ years no claims, 10% discount.

She points out the following in the policy. Some policies by other insurance companies only go to the studs, which is very costly for unit owners. This means on the order of $100 more per year per unit, which over 37 units is more than what the association would pay in difference, but it allows association to lower the fees. But SF replaces a standard unit ("replacement standard unit")--i.e., not from the studs, but what you started with (what you bought it with). If people upgrade later, there is some automatic coverage if you choose to go with SF for individual unit coverage (condo policy) and also you can additional building property coverage. The bottom line: people who have added substantially to their units should coordinate the coverage with the master policy.

Question: what about wood floors, which might not be there when we move in. We'll get some clarification from her.

Note that individual condo policies might include liability for the individual.

Issues in the policy:
1. The difference between insurance companies is how they interpret the required covered losses (page 1). She works for us, contracts with State Farm, so she advocates for us.
2. Item 24--SF does cover sewer and drain backup, in terms of association property, plus things in individual units like carpet, cleanup. Not offered by all companies.
3. If unit is damaged so badly you can't live in it, there's a loss of use coverage that would pay for someone to live elsewhere while it was being repaired.
4. On page 24 description of director's/officers liability, it covers directors. It covers up to 50 units, so would cover us. $250/yr for $1M coverage.

The quote: $4,402,346 is the individual units. $398K is CH, playstructure, etc. No garages in this quote--so this would go up some. Workshop--be careful, sunward was thinking of having an archery range. Workshop--if wood working, must be careful of combustable (exhaust system, etc. for sawdust).

The business liability is $1M per occurance. The $5k per person medical is the "goodwill gesture/first aid" to avoid lawsuits.
If renew, 3-5 years you get 5% discount. Separately, after 6 years, 10% discount.

Q: vehicle to plow snow. You can add coverage for vehicles owned by the association.

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Steve DeLuca with Nationwide

Has been in the business 13 years, general agent 7 years.

The company being quoted: Nationwide. 4th biggest in US. (SF is biggest). 24 hr claim service. Staff of 3, 9-6 M-Th, 9-5 on Friday.

The quote: $2M liability. (For example, someone is injured on the GO property, this is what our coverage would cover.) Personal/Advertising injury: for example, advertising that is racially objectionable. Medical expense is for "goodwill/first aid", paying deductibles.

Selling point: Aggregate limits by location--so 12 buildings would have up to $24M coverage for liability.

Directors & officers Error & Omissions liability: will indeed cover all of us.

The playstructure would come under the CH liability.

Coverage for CH and units based on input from the site supervisor (John).

Per building figures--we would need to adjust the figures for true replacement costs. Appourtenant structures are garages, at about 1 per unit.

Water and sewer backup is included.

Ordinance or Law: covers us in the event that for example we were required by law to install sprinklers (as happened in Philadelphia), or some new code requirement.

What is covered? Everything owned by the association? Might not cover the drywall--he will check. He will also check on vandalism (esp. with respect to windows).

Building 12 is the common house.

Q: how long is this quote good for? Probably until the end of the calendar year.

Also included is a individual unit owner's sample quote. Numbers can be adjusted as the owner wishes (for more premium). The claims history ($128) is a discount that is applied if no claims 3 years, so the $209 in the quote is if you had no claims. Otherwise, it would be $337.

Q: what is seasonal increase? Nothing--doesn't apply to us. Should have been whited out.

Any discount for no claims on master policy? Yes, but it sounds like it is done on an ad hoc basis by the underwriter when it is time for renewal.

Workshop: he would need to ask about any restrictions or issues.

Swimming pool--must be fenced & locked. no additional premium for a pool, as long it meets specifications, no diving board, etc.

Suggestion by Steve--have people sign a wavier of liability for use in the workshop.

Q: Can we change the 2% automatic increase in coverage to 4%.

(We should ask other agents about this.)

We might should talk with Bill to figure out the reconstruction cost.

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Where to go from here? Can we get the amounts of coverage the same so we can compare them? That would be ideal.

DeLuca's quote had, for example, $2M for liability (vs. $1M for SF), plus coverage for garages.

We sent an email to JD regarding reconstruction costs, so we can get DeLuca's numbers in line.

Clarify with each agent how the garage coverage is configured. (Kelly).

Then we'll ask each to reprice with same coverage ($2M liability, same property coverage using info from JD). Play structure (clarify significance of play structure being commercial).

Some concern that a commercial quality playstructure might be necessary for liability reasons. We sent an email to landscape regarding a heads up on the play structure deal.

Ask Barb about her glass coverage. And if we can add to the master coverage if someone adds on to their unit, since there could be a problem if someone adds on to their unit (not covered under SF policy).

By the way, we need to get some info on the website like:
--table showing who is responsible for repair, maintenance, replacement, etc. for LCE, CE, etc.
--local taxes
--what to look for in condo unit insurance
--copy of master document
--condo documents (bylaws, book of agreements)
--emergency claim information
--who to contact about questions

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Our next meeting: Tuesday, May 20, 7 pm at Sunward, CDC office.

Monkey: Get CDC office for 5/20 at 7 pm. done.

If the contingency passes, Willie will want to have the survey and contingency proposed items soon. Our goal is to have the proposal pass at the 5/7 meeting, and have a deadline for contingency items by midnight of the 14th. Willie will prepare the list and survey by the 16th (he will get feedback from F&L, likely Kelly on 5/16), and will both post and bring to the community-building weekend. We will ask for discussion time at the 5/19 meeting, and then have a deadline for turning in surveys by 5/23.

Monkey: get time on the 5/19 meeting for people to have time to discuss contingency items.

Monkey: send email to go-talk to warn committees that this deadline is coming for the contingency items.


At the next meeting, committee reports, Willie will report that we are looking into the audit issue.


end at 9:40 pm