This document provides a 10 point primer for boards and management firms on various insurance and risk management issues. It addresses topics like directors and officers liability insurance, contractors' insurance requirements, maintaining adequate coverage amounts for property insurance, and including indemnification clauses for board members to cover legal costs from lawsuits. The document recommends boards work with knowledgeable insurance professionals, stay informed through industry associations, and follow loss control recommendations to mitigate risks. It stresses the importance of proper insurance for all parties involved.

1. Primer
10
point
For Boards & Management Firms
214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641

2. Primer
10
point
For Boards & Management Firms
1. Do Business With Knowledgeable Professionals Who Specialize In Cooperatives & Condominiums
• Insurance Brokers/Attorneys/Accountants
• Have each attend a board meeting each year to provide advice and guidance
2. Industry Associations, Educational Conferences & Media
• The Council of New York Cooperatives & Condominiums- http://www.cnyc.com/
• The Federation of NY Housing Cooperatives - http://www.fnyhc.coop/
• Habitat Magazine & Educational Conference - http://www.habitatmag.com/
• The Cooperator Newspaper & Expo - http://cooperator.com/
• All of the above are resources for advice, guidance and references.
3. Directors & Officers Liability
✳ 70% of all D&O lawsuits are lodged in New York, New Jersey, Florida, Texas and California
✳ 65% of all Coops & Condos in New York City know of a situation that could lead to a suit against the Board
A suit naming Board Members personally places them in
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financial jeopardy, as their personal assets are at stake.
All lawsuits must be defended regardless of merit and legal expenses are very costly.
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Legal expenses for discrimination lawsuits range from $100,000 to $500,000.
Many D&O suits are not for monetary damages! Court requests are made for
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“Injunctive Relief and Declaratory Judgement,” yet still must be defended.
Most common D&O lawsuits involve allegations of:
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- Wrongful Termination
- Discrimination (Race, Religion, and Employment)
- Defamation of Character
- Breach of Contract
- Renovations
- Subleasing
- Noise
- Pets
Quality of coverage is paramount.
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Management firm needs to be insured under the contract.
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Mackoul & Associates, Inc.
214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641

3. Primer
10
point
For Boards & Management Firms
4. Homeowners Insurance And What Risks Shareholders/Unitowners Face If They Are Not Insured Properly
• Homeowners Insurance will provide coverage to restore and rebuild the unit
as well as providing protection for the cost to replace their personal property.
• Homeowners Insurance will provide coverage in the event of a covered claim
for the extra expenses incurred by the owner and his/her family during the
time of restoration to live elsewhere.
• Homeowners Insurance will provide protection against being sued by the
coop/condominium, other shareholders, or their insurance companies.
• Homeowners Insurance will provide coverage for the cost of being assessed
by the coop/condominium due to a covered claim that exceeds the buildings
coverage.
5. Pay Attention To Insurance Company Loss Control
Recommendations On Life Safety & Security Issues
• Emergency Lighting
• Hardwired or battery operated smoke detectors in common areas
• Locked entrances & exits
• Sidewalks & walkways in excellent condition
• Elevators level correctly
• Panic bars to roof
6. Update The Building Electric, Plumbing &
Central Air Conditioning
• Update from fuses to circuit breakers- the number one cause of fires.
• Change to “S” fuses in units in the interim.
• Plumbing updates - Must be systematic on all pre-war buildings.
• Burst pipes will become an increasing problem.
• Clean AC drain lines & pans to keep your building from becoming a sponge.
7. Transfer Risk To Commercial Occupancies
• Require all commercial occupancies to maintain General Liability Insurance.
• Obtain Certificates of Insurance naming the cooperative or condominium
as an Additional Insured under their insurance each year.
Mackoul & Associates, Inc.
214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641

4. Primer
10
point
For Boards & Management Firms
8. Contractors
• No Insurance Equals No Entry!!! The coop or condominium
must obtain a Certificate of Insurance naming the building and property
manager as an Additional Insured.
New York Labor Law places almost total liability on the building owners.
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Shareholder/Unit-owners must obtain certificates naming both
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the owner and the coop/condo as an Additional Insured under the
contractorʼs insurance.
Certificate must refl
ect General Liability, including Products & Completed
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Operations Coverage, as well as Workers Compensation.
A Hold Harmless Agreement in the cooperative/condominiumʼs
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favor should be signed by the contractor.
9. Donʼt Shop Too Much or Too Little
• Every 3 years is a good rule of thumb unless a large (10+%) increase
is pending or coverage is being non-renewed.
Raising the deductibles can be a source of premium savings.
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Make sure a full comparison of both coverages and premium are provided.
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Adequate coverage for Replacement Cost on the building and contents
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with Loss Of Income for one year.
Be aware of important supplemental coverages such as Broad Form
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Water/Sewer Backup, Earthquake, Flood and Building Ordinance.
Proposal should include Boiler & Machinery, Commercial Umbrella, Crime and Environmental Coverage.
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Management firm named as an Additional Insured on the General Liability and Directors & Officers Liability policies.
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10. Indemnification Clause For All Board Of Directors
• Provide for reimbursement by the cooperative or condominium to
Board Members for uninsured D&O legal expenses incurred.
• Your management firm has an Indemnification Clause with coops & condoʼs,
so why not protect each member of the board in the same fashion?
• Most Indemnification Clauses (drafted many years ago) should be eviewed
r
again in light of todayʼs climate in the coop & condo atmosphere.
Mackoul & Associates, Inc.
214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641