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Insurance broker outlines Sudden Valley property, liability and D&O coverage; earthquake and flood excluded
Summary
Club International Insurance reviewed the association's blanket property, inland marine, liability, directors nd gents and cyber coverage, noting limits, exclusions and deductible levels and advising prompt notice for potential claims.
Andrew Rutherford of Club International Insurance gave the board an overview of Sudden Valley—ommunity Association—overage and limits, describing what is and is not insured and answering board questions about docks, boats and special-event exposure.
Rutherford said the association's buildings are on a blanket property policy with a stated total limit of $13,034,000 on a replacement-cost basis. The property policy contains business-income and extra-expense coverage and includes an ordinance-or-law sublimit of $500,000 to cover costs to rebuild to current code.
He emphasized important exclusions and separate coverages: "All property insurance policies do exclude earthquake and flood, because that coverage can be purchased outside of that," Rutherford said. He advised the board that flood and earthquake insurance can be purchased separately if the association wants it, but that those perils were not on the current policy.
Inland-marine coverage (used here for marina docks and bulkheads) carries a $1,500,000 limit and is written on an actual-cash-value basis rather than replacement cost; marina greens on the golf course have a $200,000 limit on that schedule. Rutherford explained that inland-marine and property policies generally exclude ordinary wear and tear but do respond to sudden damage such as a fire or a vessel strike. He noted that wind-and-wave claims sometimes involve nuanced underwriting questions; in some instances carriers treat wind-and-wave losses as excluded events.
Liability coverage includes a $1,000,000 occurrence / $2,000,000 aggregate policy with a $15,000,000 umbrella that raises the combined liability limits for auto and general liability exposures and also sits over directors-and-officers coverage. The association also has crime coverage (employee dishonesty, forgery) and a cyber insurance policy with an indicated $1,000,000 limit for cyber-related loss. Directors-and-officers and employment-practices liability were reviewed as protection for volunteers and staff on claims such as discrimination or board actions; Rutherford noted that D&O/EPL coverage commonly requires prompt notice and typically has higher deductibles.
On deductibles, Rutherford said the property deductible is $5,000 and the directors-and-officers/employment-practices deductible is $25,000. He urged the board to call the broker promptly if there is a notice-worthy claim so the carrier and broker can advise whether the claim should be tendered immediately.
Rutherford also advised the board on special-event coverage and vendor/contractor insurance: basic on-premises liability will respond for events held on association property but a separate special-events policy can be purchased for larger gatherings or events with alcohol or third-party vendors. He recommended requiring contractors to add the association as an additional insured and to carry adequate primary coverage.
The broker said he would follow up on a firefighter/employee-benefits question with the association's benefits contact; staff also asked for a written schedule of current deductibles and limits for membership reference.
