Condo Media - June 2018 - 39
plan for the community to minimize
loss and damage in a catastrophic event.
Knowing in advance what needs to be
done and who will do it will minimize
damages and keep residents safe.
The board could also decide to retain
the risk and establish a method of funding the financial consequences of the
loss. The board can choose to increase
insurance deductibles in the policy and
include a budget line item for handling
the expense if there is a loss. The board
can choose to fund a loss as an ordinary
business expense or by levying a special
assessment of owners.
Many self-managed associations deal
with landscaping and snow removal
by transferring the risk to an insured
contractor. By shifting hazardous activity to professionals with satisfactory
insurance, the community is no longer
responsible for the risk. The board must
make sure that there is a written contract in place so that the association can
be named as an Additional Insured on
the policy otherwise the self-managed
community may be liable for part of
any claim filed. Since indemnification clauses can also limit your selfmanaged association's protection in a
contractual transfer of risk, make sure
an attorney reviews any contract before
it is executed.