This Is our Village

Wednesday, December 21, 2011

Open Letter Response by Ty Beba

Ms. Cohen, thank you for your detailed questions and your request for information on the coverage provided by Brown & Brown with the Insurance Policies in place for Century Village-West Palm Beach. We have been addressing these and other questions in insurance meetings over the past few weeks and I am available in the UCO office during office hours every day to answer any other questions. Please pardon the length of this response because I will intend to be thorough in the event that you are somehow unable to attend one of our meetings. I will address them in the same order as to maintain a level of consistency:

1. The Ordinance & Law coverage we added on to the American Coastal Property Insurance policy back in May of 2011 provided a coverage limit equal to 5% of the Insurable Limit of Each Building. It was not 2.5% as positioned by some other agents. As you suggest there are multiple options available to the each association from "no coverage" to "even higher coverage" limits. It’s just very difficult on a coverage summary page to share so many coverage, deductible, or premium options.

Example: A Building with 26 Units and a replacement cost of $1,677,483 would be covered for:

At 5% Coverage Limit: $ 83,874 in Total Coverage Limit for Demolition of Undamaged Portion of the Building AND for Increased Cost of Construction to make Code Upgrades as required by Ordinance & Law.

At 2.5 % Coverage Limit: $41,937 in Total Coverage Limit for Demolition of Undamaged Portion of the Building AND for Increased Cost of Construction to make Code Upgrades as required by Ordinance & Law.

While this coverage or the coverage limits are not mandated, it is important to consider all the additional expenses that a regular property insurance policy would not cover.

2. Actually, it is not relevant that there is currently policy for all associations to choose between a deducible of $2,500 or $5,000. If certain associations require the $2,500 deductible, we would simply issue one policy for any Associations choosing a $2,500 Deductible and another policy for All Associations choosing $5,000. The lower deductibles are just not available for all Associations and no Associations had a lower deducible last year due to claims in previous years.

Having too low of a deducible could result in minor claims being reported to the insurance company making it so that they refuse to renew the coverage in coming years, or increase the deductible option to disproportionate levels.

3. The Coverage Form that is part of your 2011 General Liability Policy through Harleysville Insurance Company has been made available to every association in their policy books. The coverage form is labeled as “CG-7347 Blanket Location Separate General Aggregate Limit”. We refer you to Item A. 4 and A.5 for the coverage language which states: “The limits shown in the Declarations for Each Occurrence, Damage to Premises Rented to You and Medical Expenses continue to apply. However, instead of being subject to the General Aggregate Limit shown in the Declarations, such limits will be subject to the separate General Aggregate Limit for that “insured location”. For purposes of this endorsement, “insured location” means any location indicated as such on the Declarations or any other premises owned or rented by you on which you are performing your ongoing operations”.

Then Pages 1 through 9 of Endorsement GU-7008 (Ed. 4-09) continue to list every Association we insure at the Village on a separate basis so that the separate limit can be designated to each association. It would be irresponsible for us to include 62 pages of our coverage forms specific for our clients on a website that is open access to everyone in the world who has Internet access. As I mentioned, the coverage forms I referenced are readily available in every Association’s Policy Book we distributed. A copy is also available at the UCO office, and one is in my possession if you’d like me to share with you in person.

4. The Umbrella Policy is what is known in our industry a “True Follow Form” policy. It literally extends coverage limits above the Liability policies with the same terms and conditions of the underlying policies. ITEM 5. on Page 2 of the Umbrella Policy requires that our General Liability policy the endorsement which we just mentioned earlier. ITEM 7. on Page 4 of our Umbrella Policy states that they will respond like our General Liability Policy as per the forms we have sent them. This is the same form we referred to on your 3rd question. Please see our response to your 3rd question regarding the posting of coverage forms on a public forum. They are part of the Insurance Books provided to all of our clients, with a copy available at the UCO office.

5. Equipment Breakdown coverage is a key coverage because it provides coverage to the Associations’ Electrical Panels. Common Area Heating & Air Conditioning Units and similar electrical and mechanical components of your building perils are not covered under the regular property insurance policy for certain perils. These perils can be losses arising from “Shorting”, “Electrical Arcing”, “Power Surges” and the like.

6. The question regarding Assessments to Unit Owners and their Homeowners Policies does not have a very easy answer. First, it is not known if every Unit owner has a Homeowners Policy in place. Second, it is not known what types of coverage limit or coverage trigger the homeowners’ policies provide even if there is one in place. Third, the loss assessment from the Association to a Unit Owner is not limited to the Association’s Wind Deductible. What if the Association has not purchased Ordinance & Law Coverage OR the limits of the Ordinance & Law option they purchased were not enough? Lastly, it is not known how long it would take to collect Assessments from Unit Owners, all the while where repairs have to be completed to the buildings. Once again, this is a very personal choice for each Association. However, we are happy to be able to provide options to our clients in the event they do not feel they have enough reserves or the ability to collect assessments in a complete and timely manner.

7. The 6 Page comparison we have compiled details every aspect of the coverage, deductibles, and limits available from the Top 6 providers of Director’s & Officers Insurance Coverage for Condo Associations. It took our organization countless hours to pour through all coverage forms for these insurers so that we could prepare the comparison. It would be unreasonable for us to be required to post our efforts on a public website so that any one of our competitors can utilize as their own. If you like, we can happily share with the coverage comparison in person.

The coverage forms we have proposed for the renewal are both from Chartis and from Liberty Mutual Insurance Company. As for the debate regarding the public ownership of Chartis’ parent company AIG Holdings, that is one that is impossible to do on this blog. The American Public did not have to bail out or own any part of Chartis, or AIG Insurance. Chartis has done a great job for any of the Associations who had claims last year. The coverage forms between insurers vary vastly in this important coverage and we are happy to discuss the details in person.
8. With the crime policy, last year’s policy carried a limit of $300,000 and did not provide coverage extensions for “Computer Fraud”, or “Funds Transfer”. We could not offer this coverage at the time because we were not your agent and too many Agents had sent too many applications to too many insurance companies, blocking our access. This year, as the Incumbent Agent, we were able to access the Insurer of our choice where we were able raise the coverage limit to $500,000 and include coverage for Theft of Association’s Money & Securities which may be kept on site, Robbery or Safe Burglary on site of the Association, Computer Fraud, and Funds Transfer. While not all these coverages may be terribly relevant to most Associations, we were able to make all these improvements at lower premiums.

We are very sensitive to all the confusion and problems the Associations at the Village have experienced with the topic of Insurance. It is very unfortunate that most of that can likely be associated with the tactics used by some Agents. Once again, we have followed every requirement and rule of the bidding committee as required from us. We will continue to address the insurance needs at the Village with the utmost professional expertise.

Thank you and Happy Holidays.

Executive Vice President
Brown & Brown of FL, Inc.
Palm Beach/Treasure Coast


  1. Mr. Beba,, a sincere thank you for your detailed and timely response. However, I appear to be experiencing a growing sense of de ja vu . Most readers of this blog will, I’m sure, remember the patronizing attitude of the former Insurance chairman, and his ‘I know what’s best for you approach’. Obviously, from your comments there are alternative options and I believe many of us would have appreciated those being explained to us. I have no desire to diminish the excellent work conducted by UCO’s Insurance Committee, who do an exemplary job of negotiation, but lets not lose sight of who the clients are here. UCO negotiate they do not collect or pay the insurance bill - we your clients do. I would argue that it may have been a relevant discussion to some of us about buying a policy from a carrier that has been all over the news in recent years. It may also have been prudent to name proposed carriers at the recent Town Insurance meeting rather than resorting to vague references about the opposition. This is building insurance, not secrets of State.

    In your handouts, in your verbal presentation, and now on the blog here going so far as to name the specific coverage form, you have stated that each Association has had a separate limit for General Liability. On the surface, the information you have provided seems fairly detailed and is very much appreciated. I may be missing something but the form you mention, “CG-7347 Blanket Location Separate General Aggregate Limit” is not to be found in my policy binder. It is not to be found in other policy binders given to many of your other clients either so perhaps blog followers may also care to look for it in their policies. Perhaps a page or two was missing as unfortunately seemed to be the case with prior years’ insurance binders. But looking at the “Form Schedule” which lists the Forms that we should expect to find in the policy. “CG-7347 Blanket Location Separate General Aggregate Limit” is not listed so the form is neither included nor listed.

    To reiterate, was our 2011 General Liability coverage, at any time, shared? Did we go from having a $2 million aggregate limit per Association to having 240 Associations sharing a single $2 million aggregate limit? Have we gone through almost a full year in which, if we hadn’t carefully checked the policies we were given, we might have only learned this fact if a serious claim occurred. After all, you mentioned our Umbrella policy is “True Follow Form”. So, while the Umbrella policy clearly states that the underlying General Liability policy must contain a “Per Location Aggregate” endorsement, what would have happened during 2011 if a claim reached the Umbrella threshold? Are we supposed to believe the Umbrella carrier would waive a requirement and cover us out of the goodness of their hearts? This is an example of a serious concern. We all depend on our agent to keep us informed and ensure that our coverage is delivered as promised.
    So can you kindly xplain this?

    Personally, for clarity, I prefer to rely on the written word so I decline your kind offer to visit you at UCO. I am of course, willing to post any relevant documents referred to above.

  2. Ms. Cohen, you are our customer and we're here to be of service. We have been speaking with our clients on an individual basis to address their specific needs in regards to insurance coverage limits as well as deductibles.

    I'm sorry you could not locate the coverage form I mentioned. We've verified that it is in fact part of the master policy at UCO. If your policy book does not include a copy, we are all too happy to mail, e-mail, or fax you a copy. You can also pick a copy at the UCO offie if you like. We can work with whatever suits you best.

    The Endorsement was issued effective 1/1/2011 which is the same date of coverage inception under the General Liability policy. There was no point in time under our coverage program where the separate limit was not in force for our clients.

    Once again, the coverage form was effective 1/1/2011. Even if you don't find a copy of the coverage forms in your policy book, it had been issued and mailed out. The insurance company, your Agent, and the Insurance Committee all have a copy the endorsement. We can send you a copy for your records as well if you provide your contact infromation to us via phone.

    There have been no sharing of limits with this policy because the endorsement was in force. No company would have been forced to pay any claim out of the goodness of their heart. They would be paying claims due to the contract language as expressed in the endorsement.

  3. Ms. Cohen, just in case your question requires a more direct answer, the Endorsement issued from Harleysville contain an "Effective Date" and a "Printed Date". If you review the actual document, you will note that the endorsement what "Printed" by the insurance company in the spring of 2011. As you will note an ANY Insurance Policy, Insurance Companies print policies after the effective date of the policies due to the actual clerical work of typing and printing the form. The coverage has been effective since 1/1/2011 and the form has been mailed out in 5/4/2011. Maybe that helps further clarify how you've in fact had specific limits by Association all along and the coverage form itself has been available for months.

  4. Thank you for your comments, Mr. Beba. I think you will find that most reasonably intelligent people prefer a direct answer to a question – unless you are aware of another reason for asking one.
    You may recall that residents picked up their policies from the UCO office in March/April 2011 and I note, by this time, the clerical work you refer to had been completed. All endorsements, apart, it would seem, from the illusive CG – 7347! were listed and included. You now inform me that the missing CG- 7347 endorsement wasn’t printed until May 2011. Am I, finally, to assume, this is the reason it wasn’t included in mine and other Association’s policies? This doesn’t, however, explain why it wasn’t listed amongst the numerous Harleyville endorsements. UCO may very well have a copy in their Master Policy but as I pointed out to you before, we are the clients not UCO. I trust when CG-7347 was printed late last spring that it was mailed to your clients and I and many other Associations who never received it are merely victims of the postal service.
    I look forward to receiving a copy of the missing CG-7347.

    Happy Holidays.


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