My condominium association relies on our "property manager" to handle our insurance for the building & liability.....

Risks of Allowing Property Managers to Handle Insurance for the Condo Board

While property managers play a vital role in managing insurance for condominium corporations, there are significant risks involved in entrusting them with this responsibility. Understanding these risks can help condo boards make informed decisions about their insurance management.

Potential Risks

• Lack of Expertise: Property managers may not have specialized knowledge in insurance, leading to inadequate coverage or poor policy selection.

• Conflict of Interest: Property managers may prioritize their interests or those of specific vendors over the best interests of the condo board and its residents.

• Inadequate Risk Assessment: If the property manager fails to conduct thorough risk assessments, the condominium may be underinsured for potential hazards.

• Poor Claims Management: Inefficient handling of claims can result in delays or denied claims, leaving the condo board vulnerable during critical times.

• Compliance Issues: A property manager may overlook important local regulations, exposing the condominium to legal liabilities due to non-compliance.

  
  

Consequences of Inadequate Insurance Management

• Financial Loss: Insufficient coverage can lead to significant financial burdens for the condo board in the event of a disaster or liability claim.

• Legal Liability: Inadequate insurance can increase the risk of lawsuits against the condo board and its members, especially if claims are not properly managed.

• Reputation Damage: Poor insurance management can harm the reputation of the condominium, affecting property values and resident satisfaction.

  
  

Mitigating Risks

To mitigate these risks, condo boards should consider the following strategies:

• Conduct regular reviews of the property manager's insurance management practices.

• Engage an independent insurance consultant to evaluate coverage and provide recommendations.

• Ensure clear communication and documentation regarding insurance policies and claims management.

  
  

Conclusion

While property managers can be valuable assets in managing insurance for condominium corporations, it is crucial for condo boards to remain vigilant and actively oversee the insurance process. By understanding the inherent risks and taking proactive steps, boards can better protect their interests and those of their residents.