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RobertF
(Florida)

Posts:21

01/09/2008 7:10 AM
We are a Condo Association with 22 homes, all of which are classified as Detatched Single Family Condominiums. We have modified our docs to make the homeowner responsbile for obtaining insurance on their house. The Association carries D&O and insurance on the swimming pool and common grounds. We have no employees and all work is done by contractors who must provide a certificate of coverage for workmen's comp. As a safety valve, we have also purchased workmens's compensation insurance; however, this is now being questioned. Our attorney has suggested we retain this coverage just in case something happens. Our President is in favor of dropping it. Would like to receive comments regarding the pro's and con's of this coverage. We are located in Florida.

RobertR1
(South Carolina)

Posts:2147

01/09/2008 7:31 AM
RobertF, This is a tough one to answer. Would have to know more about what is common property. Is the Association is responsibile for upkeep of the exterior of the units, what else does the association provide. Swimming pool, spa, tennis courts, etc. It would seem to me that the more the regime takes care of the more likely they may need workmans comp. You may be ridig about your contractors to require Workmans comp, but just suppose somkeone does do work on a private residence and that work is paid by an owner and the work might involve some of the associations responsibility. For instance, plumbing, structural modification, electric service, window replacements, some kid to pick up trash or be a general handyman gofer, etc. I see no point in paying for something that you dont use by I can also see where worksman comp might be a good idea due to the fuzziness of who is responsible for what in Condos. So, in effect, I can't really say one way or the other. Also the cost would be a factor. Maybe you can't afford it.

RobertF
(Florida)

Posts:21

01/09/2008 7:46 AM
I should have provided a little more information. The Association is responsible for maintaining the swimming pool and cabana. We have no other buildings. The individual homeowner is responsible for maintaining the interior and exterior of their homes. We contract with a lawn maintenance firm for all landscaping requirements, i.e., mowing grass, trimming bushes, etc. In addition, we have contracts with a pool maintenance company and a general type cleaning company to handle the cabana, restrooms, etc.

DonnaS
(Tennessee)

Posts:2832

01/09/2008 7:53 AM
Robert, Your D & O insurance is to cover your BOD and a liability insurance for them. The pool and other common areas are covered by another type of liability insurance. I would NOT carry a workmans comp policy because that is why you carry the liability policy. I undersatnd that these are 2 different types of coverages but comp is not your responsibility. If your board is diligent on hiring only contractors with insurance , then workmans comp is no concern of the association. By the way, Florida requires all service provider with contractors to have their own insurance so no need for the comp--again.

PaulM
(Pennsylvania)

Posts:1347

01/09/2008 8:08 AM
RobertF: ..."We have no employees and all work is done by contractors who must provide a certificate of coverage for workmen's comp." Based on the above, we would be interested in knowing the reason why your attorney suggested you/assn. also have coverage.

SusanW1
(Michigan)

Posts:2171

01/09/2008 12:45 PM
Your state should have a pool that you can get into. How much is the cost per year? What if the Treasurer slips on ice while on an errand for the Association? Or the President falls off the roof when inspecting damage?

RobertF
(Florida)

Posts:21

01/10/2008 3:39 AM
SusanW1...."Your state should have a pool that you can get into. How much is the cost per year? What if the Treasurer slips on ice while on an errand for the Association? Or the President falls off the roof when inspecting damage?" We are paying a little over $700 per year for the Workmen's Compensation coverage. Would a board member be covered under our Workmen's Compensation or under our Liability? They are not employees and are not compensated for their services.

RobertF
(Florida)

Posts:21

01/10/2008 3:54 AM
RobertF: ..."We have no employees and all work is done by contractors who must provide a certificate of coverage for workmen's comp." PaulM: ..."Based on the above, we would be interested in knowing the reason why your attorney suggested you/assn. also have coverage." The attorney believes it is a safety net just in case something happens to someone who is not covered by an employer's workmen's compensation. Florida law allows employers with less than 4 employees to be exempted from the requirement to have Workmen's Comp. In addition, an employer can choose to self insure. Assuming the employer doesn't have the money, the Association would probably be liable.

MikeS1

Posts:0

01/10/2008 4:37 AM
It sounds like you should be working with the insurance professionals here, but it sounds like the attorney may have made the recommendation to carry the W/C coverage in order to cover excess liability. If a vendor/contrator per se only carries 300,000 coverage and the loss exceeds that amount, the attorney may be trying to coverage the excess, over and above what the primary policy covers. Only a guess here, since I did P&C claims for 11 years. I highly recommend that you consult an insurance professional on this in order to properly evaluate the risk as well as your current coverages. What is really interesting is the the COA is requiring the owners to purchase a policy that covers the house/dwelling. Usually, even with Detached single family homes, we find that the COA master policy covers all the dwelling(s) with typically on average a $10,000 deductible. Often times, the COA documents hold the unit owner responsible for the deductible if the unit owner is responsible for the loss. This loss (at least the deductible) is paid out of the liability coverage, if owner is proven negligent or responsible for the loss. "Additions or Alterations/Betterments" is usually a coverage found in Condo policies to cover the interior of the condo if the master policy does not cover items like built-ins, kitchen cabs, appliances etc, the Condo Policy (old ISO form HO6) picks up coverage on these items. When you say that the "homeowner is responsible for obtaining insurance on the house", this almost leads me to believe that you have a regular homeowner policy (old ISO form HO3) policy on the home to include the entire dwelling as it stands. Is that correct? If so, I just have never seen this before. Then there is what the insurance company calls "insurable interest". Who owns the dwelling?.. and how does the HOA documents define Common Elements, limited common elements. Maybe I misread something here, but this just sound very unique.

RobertF
(Florida)

Posts:21

01/10/2008 6:48 AM
MikeS1: .... "When you say that the "homeowner is responsible for obtaining insurance on the house", this almost leads me to believe that you have a regular homeowner policy (old ISO form HO3) policy on the home to include the entire dwelling as it stands. Is that correct? If so, I just have never seen this before. Then there is what the insurance company calls "insurable interest". Who owns the dwelling?.. and how does the HOA documents define Common Elements, limited common elements. Maybe I misread something here, but this just sound very unique." We are unique. Our initial assessment was very high due to the insurance costs paid by the association. We modified our doc's and the homeowner is responsible for "all" insurance coverage on their homes. This includes the entire dwelling and even flood insurance. The home is defined as the house, driveway, entrance walkway and the mailbox (which is on a post shared with one neighbor). The homeowner owns the ground upon whch the house stands. The common elements then become everything else within the complex.

MikeS1

Posts:0

01/10/2008 7:43 AM
Robert, That's wild. I've never seen this before. Now you have me curious about the deed or title to the home. You even own the ground where the home is located? That's very unique? Is it deeded in this manner? Just curios.

RobertR1
(South Carolina)

Posts:2147

01/10/2008 8:35 AM
Mike and Robert, Robert, what Mike and I are getting at, I think, is how did your documents come about and are you listed as a corporation (INC.)under the Florida statutes. What you are describing to me is not a condo but an HOA. I just can't figure out HOW and WHY you ended up the way you are. Since you can't be very unique, only unique (one of a kind)I bet dollars to pennies you didn't start out that way. If we read right you have changed your documents, you did that? Was it registered with your Master deed and By-laws at court house? I am like Mike, I don't know what to answer and don't know what to question. Who does your books, do you have a board, do they keep records, do they file the proper tax papers, does the state bill you for property taxes, you, meaning the regime, on land you own jointly? What happend if one of those tornados come through your area. You really need some professional advice. Maybe you are located close to Donna and she might be talked into taking a consultant fee to look at your complex. Maybe you are doing what everyone else ought to be doing and we are out of step (majority), I just don't know. Mike, your posts are on point and a fresh voice.

SusanW1
(Michigan)

Posts:2171

01/10/2008 10:33 AM
Are these detached site condominiums?

RobertF
(Florida)

Posts:21

01/10/2008 1:41 PM
RobertR1 and Mike. Yes, we are listed as a Corporation. Yes, we passed an amendment to the Declaration of Condominium whereby we placed the resposibility for insurance on each unit owner. Yes, the change was registered at the Court House. We have a management company that takes care of our books and all required filings. Yes, we have a 3 member board. As previously stated, these are detached single family condominiums. To provide a little background, our development consists of 66 single family homes (22 of which are classified as condominiums) and is governed by a Home Owners Board of Directors (The Master Board, which is incorporated). The Master serves as an umbrella over the condominiums in that we are bound by all of their documents. However, the condominium section was also incorporated and has a Board of Directors and a complete set of documents of our own. When we received the Association from the developer we considered changing to a HOA; however, the cost and time involved to accomplish this was extensive. In addition, the 22 units in the condo section all rest on different size lots. To try and separate these into individual lots would be very difficult. With these factors to consider, the Board decided to remain as condo's, the residents agreed. Hope this sheds some light on the WHO, WHY, and HOW.

BradP
(Kansas)

Posts:1742

01/10/2008 2:01 PM
Robert: I would speak to your liability insurance agent. On one hand since your HOA does not employ anyone, WC would be a waste. On the other hand as someone point out, what happens to a board member getting hurt while doing official duties of the association, is that covered by liability? I am sure you have other volunteers that help as well with little tasks. Your workman's comp policy if you get one should reflect the number of employees/volunteers and the nature of what your business is. One thing to remember is we live in a litigous society, everyone says they won't sue, but when someone can't work to support their family due to an injury that will change.

RobertR1
(South Carolina)

Posts:2147

01/10/2008 3:04 PM
RobertF, Now I read that at one time the developer ran your condominiums. When he was in charge you were a condo. How did he assess each unit? When you bought and he was in charge, did you pay him your fees? Was each unit fee the same? You state you take care of landscaping of some desiginated property. How is that assessed? If you have any common property who holds deed to that? I don't doubt that you are what you say you are, but my problem is are you what you should be to protect the association (members). I live on an island. We have a POA we belong to, as does eah owner on the island no matter where they live. We also have HOA's and Condos that are governed by their own set of documents, HOA's and Condo's. We own the entire 4 1/2 acres on the ocean and we have 65 units that vary in size and configuration. We probably have 10 0r twelve different assessments amounts. Each owner owns an apportionment. The total of all the apportions is 100%. Voting, for BOD and any membership decision are voted by apportion. Now you are the same up to a point. You are saying, I think, each unit doesn't count. But if you have to pay an association bill or vote or make a decision, then the votes of the units that don't count, because they are separate individual properties, are used to decide what to do. I just can not see that being a condo but a HOA. But I know you are a condo from what you write, I'm just too dumb to see it.

MikeS1

Posts:0

01/10/2008 4:58 PM
We seemed to have slid away for the poster's original question about W/C insurance, since their situation is so different, but I have to say (like the previous poster), this question about excess W/C coverage should best be handled by a professional who is licensed in the state of Florida.

RobertF
(Florida)

Posts:21

01/10/2008 5:29 PM
RobertR1 - Okay, let's start at the beginning. When our property was first laid out it was divided into 23 lots and designated as a detached single family condominium. Each lot, except the one designated for a swimming pool, was to have a house built on it. The plot map defined which type of house could be built on each lot. We have four different houses, with each being a different size. The developer had a Property Management Company handle all the bookeeping, reporting, etc. A budget was prepared and then as assessment was established by dividing the amount needed to satisfy the budget by 22 (the number of eventual houses). As a result, until the last house was built, the budget had a shortfall that was to be covered by the developer. An association was established and incorporated with a three position board consisting of one resident and the developer (2 positions). Each homeowner was allotted one vote while the developer had 2 votes. Once the last house was built the developer turned the association over to the homeowners and a new board was elected consisting of only homeowners. A new budget was established to cover the costs of maintaining the grounds, insurance, management company expenses, etc., and the assessment was determined by dividing the amount needed by 22. Thus each homeowner pays the same assessment. Maintenance of the grounds was contracted out to a landscaping company. Ownership of the common ground is deeded to the Association with each homeowner having an equal share. Our initial assessment was very high due to the cost of insurance covering the exteriors of each home. We determined that this assessment could be significantly reduced if the homeowner assumed the responsibility for their own insurance. An amendment to our Declaration was drawn up and approved by the homeowners. In short, each house pays a quarterly assessment which will satisfy the requirements of the budget. Each house has one vote on any and all items requiring a vote, i.e, election of board, changes to by-laws, etc. The common ground belongs to each homeowner (in equal parts) but is deeded to the Association for the purpose of taxes and maintenance. Does this clarify anything?

RogerB
(Colorado)

Posts:3701

01/11/2008 7:31 AM
RobertF, you stated "The common ground belongs to each homeowner (in equal parts) but is deeded to the Association for the purpose of taxes and maintenance." The common areas are owned by the association so the association is responsible if someone gets injured. Whether that person is a homeowner, a contractor, or a subcontractor makes no difference. The assciation can be held liable. It may be prudent to have workers comp even when your landscaping contractor carries it. Why? Two examples are: 1) They could later drop it; or 2) they could hire subcontractors who do not have it.

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

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