Chicago Property Services Presents:
Condoboss Q&A #4 with Karyl Dicker Foray, Insurance Broker at Rosenthal Brothers
“How to Properly Prepare and Protect Your Condo Association”
Karyl Dicker Foray, CIRMS, CRIS, has spent the last 28 years protecting condos, townhomes, and homeowner associations. She currently handles the insurance programs for over 500 associations as an insurance broker with Rosenthal Brothers. She has written numerous articles that have appeared in trade publications. She is one of only four people in Illinois who have been awarded the nationally recognized CIRMS (Community Insurance Risk Management Specialist) designation from the Community Association Institute. She also holds the CRIS (Construction Risk Insurance Specialist) designation from the International Risk Management Institute.
Karyl’s contact information is:
708-560-1248, KForay@rosenthalbros.com, www.rosenthalbros.com
Salvatore J. Sciacca aka “Condoboss” is the President and Founder of Chicago Property Services, Chicago’s #1 community management company specializing in condos, townhomes and HOA’s of 100 units and under.
Salvatore’s contact information is:
312-455-0107 x102, ssciacca@chicagopropertyservices.com, www.chicagopropertyservices.com
Karyl Dicker Foray (KDF): To me, insurance IS exciting. I spent the first 12 years after graduating from high school in 1972 handling health insurance claims for a large glass company and then selling personal lines insurance. In 1984 I discovered the world of commercial lines insurance and I knew I had found my passion. Being a people person my boss asked me to work with a management firm whose accounts needed some “hand holding” and the rest is history. Since 1985 I have worked for 3 insurance agencies – with the last 15 years at Rosenthal Brothers.
The fact that I get to speak to different people every day, handle situations that are sometimes emergencies, help newer insurance agents learn about insuring habitational risks and get to be creative in putting together insurance programs for associations truly keeps me very busy and happy. I also teach classes on insurance to Boards and enjoy the challenge of finding the best insurance programs for my clients that not only meet state regulations but fit within their budgets.
SS: What are the top 5 things board of directors need to know about community association insurance?KDF: In David Letterman style, the top 5 things that Boards need to know about community association insurance are:
- Some deals ARE just too good to be true. If your current insurance agent is giving you a renewal program premium of $20,000 and someone else comes in with a quote of $10,000 please don’t trust someone who tells you that the programs are the same – there HAS to be a difference.
- Make sure the insurance companies you select to insure your property have strong financial ratings. Go to www.ambest.com and discover the ratings of companies you want to place your business with.
- Make sure the insurance agent you are working with has experience in insuring community associations. This is not the time to ask your cousin’s best friend’s husband to quote on your insurance program unless he is someone who is an expert in this niche.
- Consider hiring an insurance consultant to do a review of your insurance program. Check out membership directories of CAI and ACTHA for names………
- And MOST the most important thing that Board of Directors needs to know about community association insurance is that not all insurance coverages that different agents are presenting to you are created equal. Just because the two quotes you have obtained say “Directors’ & Officers Liability – $1,000,000 limit” – they are NOT necessarily the same. Ask questions, get answers in writing and remember, the only dumb question is the one that is not asked.
SS: What are the potential worse case scenarios and consequences of not having proper insurance?
KDF: A consequence of not having proper insurance is that at the time of a loss you won’t have insurance dollars to cover your loss fully. Let’s say that your building burns to the ground. Your current policy has a $10,000,000 property limit and $250,000 in Increased Cost of Construction coverage. You find out that it will cost $15,000,000 to rebuild your building and another $500,000 to put in a required sprinkler system and elevator system in your building. The $5,250,000 shortage will have to come out of homeowners’ pockets via special assessment. Then, some homeowners sue the Board because they didn’t buy enough insurance. It is then discovered that your Directors & Officers liability policy has an exclusion in it stating that there is no coverage for “insurance related claims.”
This means that the Association will have to pay out of pocket for the lawsuit the owners filed. You need to make sure you have enough insurance to cover your losses and that your insurance policy is reviewed annually by someone who specializes in community association insurance (such as a consultant). Unfortunately Boards sometime just approve renewals automatically without taking the time to review coverage areas.
SS: What are the risks of working with lower rated carriers? How about the potential downside of working with a company that sells direct such as American Family or Allstate?KDF: There are two different types of insurance agents — direct writers and independent agents. Direct writers are normally employees of the company they represent – such as Farmers, Allstate, Nationwide, State Farm and American Family. Independent agents act as brokers for multiple insurance companies and can represent as many companies as their agency has contracts with. I am an independent agent and Rosenthal Brothers probably represents over 100 insurance companies. As I mentioned earlier, if you go to www.ambest.com you can check out the rating of all insurance companies (both direct writers companies such as State Farm or an independent agent represented company like Travelers or Philadelphia).
If your Association is insured through a lower rated company you are taking the chance that should a loss occur, the insurance company won’t have the funds to cover your claim. At Rosenthal Brothers it is against our policy to place coverage for any of our clients with an insurance company that has a lower rating than an “A.”
SS: A friend of mine once said insurance is legalized extortion. What do you have to say about that?KDF: I am not sure who your friend is, but I wonder what he or she would say if they had a fire in their unit and their insurance company paid them $25,000 to replace their computer, furniture and made sure they had enough money to rebuild their kitchen. I bet the words “legalized extortion” would turn into “overly generous” very quickly – especially if they paid around $300 a year for their own personal insurance policy!
SS: What makes you and Rosenthal Bros. so successful in the community association industry?KDF: I think trust is a key component in being successful. I want my clients to trust not only the knowledge I share with them but the recommendations I give them. I represent what I feel is one of the most professional and ethical agencies in the Chicagoland area. Rosenthal Brothers has been in business since 1961 and we are still a family owned agency. That in itself says a lot about who we are and how we operate. SS: What sets you apart from other brokers? Why do property managers and board of directors love to work with you so much? KDF: I feel that I am a great hand-holder. Personally I take the time to educate my clients about insurance. I want them to feel that they can call and ask me questions on any insurance related matter – whether I insure the property they have questions about or not.
I am not a pushy sales-person and feel that if I offer good service then my clients will think of me when their Boards ask them for recommendations on whom to call for alternate quotes as renewal time. I also feel that the fact that I have been working in this niche for almost 30 years shows property managers that I am here for the long haul and not an agent that is going to disappear tomorrow and leave them working with someone they don’t know.
SS: How involved are you with CAI and other industry and trade related organizations? And why do you feel that is important for a person in your position?KDF: While I am not very involved in a local level with CAI, I am quite involved on a national level. I speak at local CAI seminars on insurance and have been asked to speak at the local CAI Trade Show for many years. I am the current head of the annual Shop Talk for Insurance Agents program which is held at the CAI National Conference annually and am very involved on a local level with ACTHA. I feel that anyone who is committed to their career should be an active member of an organization that represents their industry. This is also a good way to give and receive education, gain recognition and represent your chosen career on an ongoing basis.
SS: What are the most common mistakes made when people are selecting community association insurance coverage? Perhaps being underinsured? Or on the opposite side of the spectrum, is there such a thing as having too much insurance coverage?KDF: The most common mistake that people make when selecting association insurance coverage is not asking for help from those that specialize in this area. A retired Life Insurance agent who offers their service in making a renewal recommendation might not be the right person to make the final decision. Would you want a cardiologist making recommendations on the best way to treat a serious sports injury? Same industries – different specialties. Insurance is probably one of the largest budget items a community association has and you want to use the services and expertise of someone who specializes in this highly specialized, state regulated expense. Often people ask me how much umbrella liability insurance to buy. That is like asking how high is up?
Just because you have never called upon your umbrella policy to pay a claim in the past it doesn’t mean you won’t need it in the future. An insurance agent, the Board and your property manager all need to sit down and analyze your exposure (do you have a pool, lakes or retention ponds?) and make an educated decision on how much to buy and how much the Association can realistically afford.
SS: What changes do you see coming in the insurance industry over the next 5 years?KDF: I think that over the next 5 years there will be more state regulation in the area of insurance coverage for community associations. There are areas of the Illinois Condominium Property Act and the Common Interest Community Association Act that need to be fine tuned. I feel that insurance premiums will level off and possibly be going down in some areas. I also feel that there will be some major changes in which insurance companies will be actively soliciting community associations clients and some that might actually leave this arena completely. Overall it will be a very interesting 5 years, that is for sure!
About the Authors:
Salvatore J. Sciacca aka “Condoboss” is one of the nation’s leading experts in the community property management industry. He is also the President and Founder of Chicago Property Services, Chicago’s #1 community property management company specializing in management and operations of condos/townhomes/HOA’s of 100 units and under. Salvatore is also the founder of managmycommunity.com (MMC), which is a state-of-the-art online support portal for community associations.
With over 20 years of industry experience, Salvatore is recognized for his extensive knowledge of capital planning, preventative maintenance, cost-saving measures and community building techniques. He holds industry stature as a Certified Manager of Community Associations (CMCA), the designation of Association Management Specialist (AMS) and is fully licensed as a manager (License #: 261.001386) through the State of IL.
Salvatore’s contact information is:
312-455-0107 x102, ssciacca@chicagopropertyservices.com, www.chicagopropertyservices.com
Karyl Dicker Foray, CIRMS, CRIS, has spent the last 28 years protecting condos, townhomes, and homeowner associations. She currently handles the insurance programs for over 500 associations as an insurance broker with Rosenthal Brothers. She has written numerous articles that have appeared in trade publications.
She is one of only four people in Illinois who have been awarded the nationally recognized CIRMS (Community Insurance Risk Management Specialist) designation from the Community Association Institute. She also holds the CRIS (Construction Risk Insurance Specialist) designation from the International Risk Management Institute.
Karyl’s contact information is:
708-560-1248, KForay@rosenthalbros.com, www.rosenthalbros.com