Page 8 - CooperatorNews Chicagoland Fall 2021

8 COOPERATORNEWS CHICAGOLAND
—FALL 2021
CHICAGO.COOPERATORNEWS.COM
direct loss, indirect loss, partial loss,
and
catastrophic loss.
According to Insuranceopedia, these gle-entity property coverage is provided
different losses can be defined as follows:
Direct loss
refers to physical or finan-
cial loss or injury resulting directly from the building’s master deed and bylaws.
an unbroken chain of events, or a proxi-
mate cause that led to a risk covered by ered an original base model unit, or how tion an adjuster will have with unit own-
an insurance policy. The latter refers to the unit was sold at its original convey-
a cause that immediately precedes the ance, depending on the wording of the tion. This is because in a building claim,
damage or injury, and “without which governing document.”
or in case of the presence of superven-
ing events, no damage or injury would age exists for all parts of the building
have resulted.” An example of a direct loss structure, including any upgrades, bet-
would be if a tornado struck your town terments, improvements, etc. within the mates and compose a report
and took the roof off your building; your
direct loss would include damage to the
structure, as well as to any equipment,
furniture, inventory, etc.
Indirect loss
is “an expense caused by
damage or injury to insured individuals
or property that is beyond the scope of
the covered damage. This expense is at-
tributable to the covered loss, but is not
part of the covered loss itself.” If that
same tornado destroys the roof of your
store, not only are there rebuilding costs,
but the business cannot operate until the
damage is fixed. Income lost during the
rebuilding—and after it, if customers
stick with the alternatives they find in the
meantime—represents an indirect loss.
Partial loss
refers to damage to an in-
sured property that is not total—mean-
ing that it does not prevent the property
from performing its function, nor does it units. Your coverage vis-à-vis the build-
exceed the coverage limit of the insurance ing, association, or corporation depends
policy. A fire that destroys a room, but on what kind of coverage the property
not the entire house, would be an example has.”
of a partial loss.
Catastrophic loss
refers to a loss that insurance for their individual units,
is random and extremely serious—one which generally also covers contents.
that has a devastating effect and cannot Your individual insurance should cover
be foreseen, and therefore is very difficult items excluded by any or all of the three
to make whole without insurance. Catas-
trophe insurance exists to prevent indi-
viduals and businesses in the event of a
major severe event that results in losses by Fleming outlining the steps for cor-
that are much larger than usual. Examples rectly filing a claim.
of catastrophic losses are hurricanes and
wildfires that destroy large amounts of
property.
Building vs. Unit
Of course, the lynchpin question about
any insurance policy is, ‘What does it essary—fire department, water company,
cover?’ In a condominium or co-op, the police department, etc.
building’s insurance covers the common
areas and limited common areas, and to fire or water loss, it is important to secure
some extent—depending on the policy—
certain structural components of individ-
ual units. Most owners (and renters, too,
if they’re smart) carry their own individ-
ual policy to cover the contents of their mediation company to go in and dry out
apartment itself.
Ryan Fleming, an insurance profes-
sional with JGS Insurance based in Holm-
del, New Jersey, clarifies further: “There claim to their carrier, and all affected unit
are basically three options for what’s cov-
ered: bare-walls, single-entity, and all-in own homeowners’ carrier
coverage. Bare-walls property coverage
is provided for all common and limited
common elements—coverage extends up
to the unfinished interior surfaces. Sin-
for all common and limited common ele-
ments, as well as the units as defined in inspection
Coverage extends to what can be consid-
Fleming continues, “All-in cover-
In addition, homeowners often have
types of policies described above.
Filing a Claim
Here is a general breakdown provided
Habitational Claims Steps
1. Ensure that all unit owners notify
the property managers of a loss when it
occurs
2. Notify the proper authority if nec-
3. Secure the building—whether it is a
the building to ensure no further damage
occurs
4. Make any necessary temporary or
emergency repairs, such as calling a re-
the unit, board up windows, set up tem-
porary electric power, etc.
5. The association should report the
owners need to report the claim to their
Timeline for a Reported Building Claim
1. Claim is reported to agent
2. Claims representative will process a
claim with the association’s carrier
3. Within two days an adjuster will
contact the property manager to set up an
4. All communication will be with the
property manager; the only communica-
ers is to access the units for an inspec-
the unit owners are not the insured—the
building itself is
5. After the inspection takes place, the
independent adjuster will complete esti-
6. Within 30 days, depending on how
extensive the loss is, the report will be
completed and sent to the Community
Association Underwriters of America,
Inc. (CAU) adjuster for review
7. A coverage determination is made
by the CAU adjuster
8. If coverage is afforded, the estimate
and check will be sent to the property
manager
9. It is up to the property manager,
along with the board, to either manage
the repairs or disperse the funds to the af-
fected units.
As an owner or shareholder, make sure
you are aware of the terms of your policy
and those policies that cover your associ-
ation or corporation. In the final analysis,
insurance terms are specific to the poli-
cies you and your community have.
n
A J Sidransky is a staff writer/reporter for
CooperatorNews, and a published novelist.
LOSS, INSURANCE,...
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as well as any other dangerous or hazard-
ous conditions. Interior and exterior in-
spections performed by the municipality
may not be on an annual or other regular
basis. Instead, a complaint to the depart-
ment may lead to an inspection, or the
department may have a schedule pur-
suant to which a department inspector
visits different areas of the municipality
periodically. I am not aware of any mu-
nicipalities that mandate regular inspec-
tions of the overall structural soundness
of a building for the purposes of prevent-
ing a building collapse, such as what oc-
curred in Surfside, Florida.”
Kasten adds that some municipalities
do require regular inspections of build-
ings or certain aspects of them. “For ex-
ample,” he says, “the City of Chicago has
what is commonly referred to as the Chi-
cago Façade Ordinance. That ordinance
mandates that owners of high-rise build-
ings over 80 feet tall prepare a written
condition assessment report regarding
the exterior of the building, and file that
“All-in coverage exists
for all parts of the building
structure, including any
upgrades, betterments,
improvements, etc. within
the units. Your coverage
vis-à-vis the building,
association, or corporation
depends on what kind of
coverage the property has.”
—Ryan Fleming
report with the City. In other words, the
City requires building owners to regular-
ly inspect the safety of the façades of their
buildings. The City does not perform the
inspection; it must be performed by a li-
censed architect or structural engineer.
The type and frequency of the report
depends on the class of the building, as
are defined in the ordinance. The City of
Chicago also requires building owners to
obtain and file written condition assess-
ment reports on the condition of exterior
exposed metal structures, such as signs,
antennae, fire escapes, flag poles, etc.”
New York
“In New York State, condominiums
are governed by Article 9B of the Real
Property Act,” says Mark Hakim, an at-
torney specializing in co-op and condo-
minium law with the firm of Schwartz
Sladkus Reich Greenberg Atlas. “The Act
provides a framework for the formation,
operation, and management of condo-
miniums in New York. It is intended to
provide the basis for which the offering
plan is prepared; the requisite disclosures
are made; and the building is governed,
used, and managed. It is not intended to
micromanage the day-to-day operations
of any building. It’s left up to the boards
of each building to determine the build-
ing’s needs and make repairs and replace-
ments consistent with those needs, as well
as enact budget and policy subject to the
specific language of its governing docu-
ments. The Act is not intended to, nor
does it contain, any requirements or lan-
guage mandating when and what types of
inspections, repairs, or replacement are
to be made to buildings, including the
frequency thereof. Rather, that is left to
local regulating authorities to enact.”
Dennis Greenstein, an attorney with
Seyfarth Shaw, a global law firm with
offices in Manhattan, concurs. He says
there is no clear mandate for inspections
in the New York State Condominium
Act; however, “The New York City De-
partment of Buildings (DOB) Façade In-
spection & Safety Program, also referred
to as Local Law 11, requires that owners
of buildings with more than six stories
have a professional engineer or registered
architect examine the building’s exterior
walls every five years. While it does not
require an inspection of the entire build-
ing, this has been a very effective law. It
was initially more limited in the façade
areas to be inspected, but was then ex-
panded to the current requirements.
Among other things, if unsafe conditions
are found in the inspection of the façade,
the engineer or architect must notify the
City and the building owner and advise
what appropriate protective measures are
to be taken.” Greenstein adds that Lo-
cal Law 11 also requires that conditions
found to be unsafe must be corrected
within a certain time from the date the
DOB is notified, and a form be filed with
STRUCTURAL...
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