Latest Posts

  1. Why Do Property Managers Need Errors & Omissions Insurance?

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    Property managers wear many different hats in the course of their jobs. In addition to overseeing the maintenance, security, and the overall welfare of the properties they manage, at times they may also function as leasing agents, real estate agents, appraisers, consultants, or construction managers. To do so, they must be knowledgeable and up to date on zoning regulations, tenant laws, tax information, and property values. In addition, they are responsible for making sure lease agreements, purchase and sale agreements, and work orders are complete, accurate, and submitted to the proper authorities when necessary.

    Due to the wide array of duties and responsibilities they have and the tight deadlines they operate under, even the most thorough and meticulous property managers inevitably make errors. Whether it’s an error of commission, such as entering the wrong information into a purchase agreement, or an error of omission, such as failing to disclose known pollutants, the result is often the same—a lawsuit.

    Without the right type of insurance, the cost of defending a lawsuit can be financially devastating for a property management company. Property managers often mistakenly believe their Commercial General Liability (CGL) policies will protect them from lawsuits stemming from a negligent act, error, or omission, but a typical CGL policy only covers bodily injury, property damage, personal injury, and advertising injury claims. To protect themselves from claims—such as negligence, misrepresentation, inaccurate advice, and violation of good faith and fair dealing—property managers must instead turn to property management professional liability insurance.

    What Is Property Management Professional Liability Insurance?

    Property management professional liability insurance, also known as Errors & Omissions (E&O) insurance, is supplementary liability insurance designed to safeguard a business against a catastrophic loss in the event of a lawsuit due to a negligent act, error, or omission by the property manager or someone in his or her employ. The policy covers the sizable legal defense costs incurred during the course of a lawsuit as well as the final judgment if the business owner does not win the lawsuit. In addition to claims of error, omission, or negligence, this type of coverage can also be designed to protect against slander, libel, and breach of contract. Policies typically do not provide coverage for nonfinancial losses or for intentional or dishonest acts.

    Property management professional liability insurance policies generally have both a claim limit and an annual limit that is based on the insured’s exposure. The claim limit is the maximum amount that will be paid for any single event, and the annual limit is the maximum that will be paid in any one year. Typical limits range from $250,000/$500,000 to $2,000,000/$4,000,000 and differ depending on the individual business. Because there isn’t a standard policy, an experienced agent who understands your needs is invaluable.

  2. Social Distance: COVID-19 and Community Associations

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    COVID-19 has thrown virtually every aspect of modern life into disarray. From small businesses and supply chains right down to simply going outside to enjoy a day at the park with friends, everything seems to have changed overnight. How, then, does this affect community associations, which are largely dependent on social interaction? Local communities, homeowner’s associations, high-rise buildings, large apartment complexes, almost any community setting in which people live are going through a sense of turmoil and have questions about what is essential and what isn’t, and how to handle things moving forward.

    The federal government (and subsequently state and local governments) have put out a lot of information what things they want done but have left a lot to be desired in terms of the “definitions” of a lot of the terminology being thrown around. What businesses count as essential? What employees at those businesses are deemed essential? What sort of issues could arise in terms liability for businesses which are still operating during the crisis. For community associations, this is understandably leading to a lot of crosstalk between tenants and community members, managers, owners, and insurance companies trying to untangle the situation.

    Of course, exactly what can and needs to be done depends on the type of community association being dealt with as well. A gated community with a homeowners association is understandably going to have very different needs than, say, a condominium or a large high-rise building will.

    Here are some situations to briefly consider, just to show how complex the questions can be:

    • Could a lack of landscaping on a property become an issue if someone were to trip on tall weeds or debris? Are landscapers considered essential personnel?
    • Should sneeze guards or plexiglass enclosures be placed around lobby staff in buildings to protect them? Some grocery stores are opting for this. Will it work and what are the implications of doing so?
    • Does the presence of a virus count as property damage? How does business continuity work for community associations?
    • Do pools need to be modified or closed?
    • How are budget going to be handled? Money is already allocated for specific things and with all of the changes, what will need to be purchased and where will that money come from?
    • Should janitorial or restoration companies be called to come in and disinfect? If so, when?

    How is your community association handling things? Do you have a plan in place? With no end in sight, we hope to keep you updated with more specific information about individual situations and answer some of the questions that you have, click here to contact us.

  3. Client Advisory: COVID-19 Cyber Attacks

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    Given recent events, it is our responsibility to keep you informed about how the COVID-19 Coronavirus epidemic has impacted businesses from a Cyber perspective.

    Since the start of the new year, Cyber criminals have registered over 4,000 domain names containing the phrases “Corona” and/or “Covid”. These domains are being used to execute phishing and ransomware attacks disguised as Coronavirus related emails. Fraudulent emails may come in the form of a message from the Center for Disease Control & Prevention (CDS), health advice from a medical specialist, or even internal workplace policy notifications.  Click here to learn more.

    Best Practices to Avoid a Cyber Incident

    Since many businesses are instructing staff members to work remotely to mitigate the spread of COVID-19, the chances of companies experiencing a cybercrime incident, such as a phishing scam or ransomware attack, have increased dramatically.  Here are some helpful practices that you can utilize to avoid falling victim to these attacks:

    1. Multi Factor Authentication: In order to prevent hackers from obtaining access to emails, we highly recommend utilizing Multi-Factor Authentication (MFA) when logging into email related accounts and applications that require a username and password. MFA will send a text / alert to the user’s cell phone with an authorization code, which will be used to confirm the person logging into the email account is in fact them.  This is one of the most successful methods of preventing hackers from using brute force attacks, in which they run a program that rallies through a series of passwords until one works.
    2. Phishing Training: One of the best practices that businesses can employ in order to prevent fraudulent email incidents is to train personnel on how to spot them.  If you are an Evolve policyholder, you have access to one of our free risk management tools called CyberRiskAware. This program allows the user to create fake phishing email campaigns which are sent to staff members. If a staff member opens the email and clicks on a link, they will be prompted to watch an educational video about fraudulent email awareness.
    3. Advanced Preparation / Anticipation:  In the event of a phishing or ransomware attack, it is important to have a plan of action in place in order to contain the incident as quickly as possible.  Our 24/7 cyber incident response team is ready to provide immediate assistance, so please be sure to contract them as quickly as possible if you believe your business may have experiences an email breach. 

    Recently Reported COVID-19 Hacks

    Click the links below for more information on targeted COVID-19 hacks in recent news:

    Like many organizations, we are learning and adapting to this emerging risk. We are here to assist our clients as needed. If you have a specific coverage question, please contact us.

  4. Impact of Coronavirus on Community Associations

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    As you know, the number of reported cases of Coronavirus/COVID-19 is increasing each day. The president has declared a national emergency and high-profile events in our area and across the country have been canceled or postponed to avoid exposure to the public through large gatherings. Further, as school systems are closing and moving to online classrooms, and transportation and other services may become more limited, we would recommend that Community Association Boards of Directors and management companies also consider the long-term welfare of residents and plan accordingly.

    Property Coverage

    Property insurance covers loss or damage to owned property of a direct, physical nature, and at this time few if any businesses have reported actual property damage resulting from the Coronavirus. There may be issues surrounding the ability to occupy, resulting in a temporary closure of a business (and for a condominium, cooperative, or homeowners association, such closures would not apply to homes or units, but rather to amenities). It’s important to note, however, that such closures likely would not be covered by an insured’s Business Income coverage form, which exclude virus and bacteria loss.

    Understanding that an Association’s amenities generate income (or the expenses of the amenities are built into assessments), it is likely (but not assured) the good business judgment rule would apply:

    The business judgment rule is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.

    Business Interruption under Commercial Property

    In order for the Commercial Property policy to trigger coverage for Loss of Business Income the following chain of events must occur:

    • Physical damage to insured property (building and/or business personal property);
    • Physical damage to insured property as a result of a covered peril;
    • Physical damage must result in an interruption of business; and
    • The interruption of business must occur for a defined period of time (waiting period)

    Liability

    Naturally, Associations with amenities may be wondering whether to keep amenities such as clubhouses, fitness rooms, spas, swimming pools, etc., open during the high alert period, or until such time as the virus has run its course and the Centers for Disease Control (CDC) make public announcements lifting the alert.

    Recognize that it is impossible to keep surfaces clean and free from bacteria all the time, even when properly disinfected. Until we learn more, Boards may want to close off amenities and postpone meetings to protect themselves and members from further spread of the disease. It’s important to note that General Liability policies, which respond to bodily injury claims, typically include an exclusion for bacteria and virus loss.

    Cyber Liability

    Coverage may be triggered if for instance, the Board and/or management were to allow staff to work from home. Whether an employee’s personal computer is equipped with the same controls an office computer has remains to be seen and if an employee’s personal computer is hacked and association or member personally identifiable information is breached, the Association could have a cyber claim.

    Workers’ Compensation

    While Workers’ Comp is not intended to cover claims for communicable and contagious diseases, there might be exceptions, depending on how and where COVID-19 is contracted.  Coverage evaluations will be based on a thorough review of the facts and circumstances of each claim.

    Directors and Officers (D&O) Insurance

    Shareholders and other stakeholders could sue a business should they fail to respond appropriately to COVID-19 concerns. Specifically, stakeholders may contend that management failed to develop adequate contingency plans or detail how COVID-19 could impact the company’s financial performance. It should be noted that most D&O policies exclude coverage for bodily injuries, but may offer some protection depending on the specific allegations. As such, it’s important for businesses to review the scope of their D&O policies to confirm they are covered in the event of an incident.

    In addition, recognize that doing nothing may result in wrongful act/failure to act allegations against the Board and management. For instance, the Association may open itself up to claims if the fitness equipment were not properly cleaned frequently, or if the Association opted to keep its amenities open or move forward with activities and meetings when perhaps closing and postponing for a period of time might have been the better option. An Association’s Directors and Officers Liability policy is written to respond to allegations (actual or alleged) involving wrongful acts and/or failure to act, but those policies also include an absolute bodily injury exclusion.

    Person to person contact between owners may raise concerns, but there is no duty for the Association to test its owners for virus. Certainly issuing a statement to your members to stay home if they are ill or in a high-risk group, avoid common areas and amenities if they are ill, to call a doctor prior to visiting a doctor’s office or emergency room, to stay away from large gatherings, to wash hands frequently, etc., would be a proactive rather than silent approach to addressing this issue (regardless of all the media information available).

    The information we and the general public are receiving continues to update almost daily. We recommend that our clients take into consideration their own unique exposures and plan with caution, considering the long-term welfare of residents. We also invite you to review (and check back frequently) the Centers for Disease Control site at:

    https://www.cdc.gov/coronavirus/index.html

    For tips on what you can do to limit the spread of Coronavirus, we recommend an article written by Edmund Allcock, a partner with the law firm of Marcus, Errico, Emmer & Brooks of Braintree, Massachusetts. Ed is current president of the College of Community Association lawyers:

    https://cooperator.com/article/coronavirus/full

    Like many organizations, we are learning and adapting to this emerging risk. We are here to assist our clients as needed. If you have a specific coverage question, please contact us.

  5. Factors Driving a Hard Insurance Market and How to Respond

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    From an insurance buyer’s perspective, it can sometimes feel as if premium prices change on a whim. But the truth is that the insurance market is cyclical in nature, fluctuating between soft and hard markets:

    • Soft markets—A soft market, which is sometimes called a buyer’s market, is characterized by stable premiums, broader terms of coverage, increased capacity, higher available limits and competition among insurance carriers for new business.
    • Hard markets—A hard market, which is sometimes called a seller’s market, is characterized by increased premiums, diminished underwriting appetite and capacity, restricted coverage and less competition among insurance carriers for new business.

    While many insurance buyers have enjoyed a soft market for years, the market is hardening. As a result, business leaders now face tough choices regarding their insurance, making it all the more important for them to understand what to expect in a hardening market and how to respond effectively.

    Factors Contributing to a Hardening Market

    In what was one of the longest soft markets in recent years, businesses across several lines of insurance enjoyed stable premiums and expanded coverage for decades. However, after years of gradual changes, the market is firming, leading to increased premiums and reduced capacity.

    A number of different factors affect insurance pricing, but the following are common contributors to the hardening market:

    • Catastrophic losses—Floods, hurricanes, wildfires and similar disasters are increasingly common and devastating. Years of costly disasters like these have compounded losses for insurers, driving up the cost of coverage overall.
    • Claims costs—Claims are increasing in both frequency and severity year over year. One reason for this is that settlement verdicts for bodily injury claims are steadily rising. Attorneys are more inclined to take claims to trial. This extends litigation and significantly raises the cost to defend a claim. Additionally, advances in health care have made treatment more effective, and people are living longer, fuller lives even after a serious accident. While this is a positive trend, it has had an impact on compensatory damages and benefits.
    • Underwriting standards—Insurers are struggling to overcome underwriting losses, especially given how low interest rates have remained in recent times. This has made carriers more cautious, and many are restricting the classes of businesses and lines of insurance they are willing to underwrite.
    • Investment returns—Nearly every insurance carrier uses the funds it receives from premiums to invest in other markets. However, reduced interest rates have negatively impacted profitability, and carriers have a reduced their appetite for risk as a result.
    • Reinsurance—Reinsurance is coverage for insurance companies. Carriers often buy reinsurance for risks they can’t or don’t wish to retain fully. However, reinsurance is becoming more expensive to obtain, which is causing carriers to increase their rates.

    What to Expect During a Hard Market and How to Respond

    • Even the most prepared organizations will have to adapt to the hard market, and businesses can expect to face:
    • Higher premiums
    • Increased scrutiny when it comes to underwriting (e.g., underwriters asking for more information regarding a business’s risk and characteristics)
    • Coverage restrictions (e.g., increased retentions) or exclusions
    • Conditional or nonrenewal notices

    Put simply, during a hard market, insurance buyers may face difficult decisions regarding their insurance coverage. Thankfully, however, businesses are not without recourse in the face of a hard market. The following are some strategies to consider to help navigate shifts in the market:

    • Review your insurance program. Above all, check that your policies account for your business’s greatest exposures. An understanding of your coverage ensures you’re not overlooking any exclusions and will help you secure the right policy for your operations. During a hardening market, it may be necessary to make adjustments to your policies. However, those adjustments shouldn’t come at the expense of the coverage you need.
    • Bolster your risk management efforts where possible. Doing so makes your business more attractive to insurers. Your broker can also help you review existing policies and procedures, and make suggestions on ways to secure favorable quotes.
    • Know your loss history. In a hard market, underwriters will be especially critical when reviewing loss trends. Be prepared to explain the factors contributing to a specific loss and the steps you’ve taken to mitigate future losses.
    • Budget wisely and plan ahead. In some cases, premium increases are unavoidable, and organizations should be prepared. Businesses should budget accordingly and take insurance costs into account alongside their other normal expenses.
    • Work with the right insurance broker. During a hard insurance market, it’s vital to have a competent insurance professional advising your business. Be sure to partner with a broker that has strong carrier relationships and knowledge of your industry.
    • Communicate with your broker early and often to determine how the hard market will affect your business. Starting the renewal process early can give your broker more time to secure the best coverage for your business.

    Business owners who proactively address risk, control losses and manage exposures will be better prepared for a hardening market than those who do not. Work with your broker now to prepare your business for changes down the road.

    Contact JGS Insurance today to get started.

     

  6. Global Risk: Managing with a Master Controlled Program

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    Transacting business in today’s global risk environment is becoming increasingly more common. The world is becoming more and more connected by the day with the introduction of new technologies and advance infrastructures. Whether managing established foreign operations or venturing overseas for the first time, multinational organizations are vulnerable to a variety of global risk not typically insured under a domestic insurance program.

    Companies may enjoy the competitive advantage of doing business in a globalized marketplace, but you may find yourself asking, how will my company consistently manage and measure global risk across several different countries? Such companies may be faced with the following risks:

    • Relocation. Having employees either permanently or temporarily move to other countries as part of the business.
    • Traveling overseas. This could include trade shows or other events. It also includes sponsored trips to other countries or trips in which business operations are performed.
    • Import/export. This includes the holding of foreign licenses used to sell products or utilizing the services of suppliers who are located outside the United States.
    • The use of foreign warehousing services. Domestic companies often purchase international goods which are then stored at a warehouse for before they are shipped to the United States.
    • Crisis situations from political unrest and personal threats can happen anywhere and anytime in the world, putting employees at danger.
    • Liabilities arising out of the operations or premises.
    • Liability for bodily injury or product damage as a result of a defective product or installation.

    A number of specialist carriers are able to handle international risk, but it can be very difficult trying to locate a carrier who is able to write full accounts across the globe. Trying to handle the risks in individual pieces can make everything overly complicated. Businesses that handle risk in this way are reliant on overseas carriers. Suddenly they find themselves dealing with multiple carriers and brokers, some local and some international, and ultimately unaware of whom they need to call when they need help.

    Compounding that even further is the fact that many countries require a broker to be in the mix in some capacity, which often leads to confusion as to what the terms and conditions are, who to contact for claims, and what exactly is being covered. More often than not, that leads to coverage gaps and turns a normal process into a significantly more complicated one.

    Dealing with local laws and regulations affects many facets of risk management, not only in the way that claims are handled but also in even knowing what claims can be made to begin with. What might be a standard phrase in the United States or something that is very typical might not be typical at all elsewhere.

    A Master Controlled Program with a Single Point of Contact is the ideal and simplest solution to consistently manage global risk. A Master Controlled Program offers unique benefits over a fragmented policies approach. The advantages of a Master Controlled Program include:

    • coordination of all multinational policies to eliminate coverage duplication, to reduce insurance cost, and to better control the Master Program to ensure consistency and continuity;
    • ease of management for organizing important coverage to increase the flexibility of use and access to a diverse portfolio;
    • compliance and understanding of local markets, regulation, and culture;
    • obtaining seamless claims administration with worldwide claims coordination; and
    • achieving worldwide loss control strategies in local regulations and US standards.

    Structure your Master Controlled Program to protect your employees, reputation, and international assets with the following available coverages:

    • Foreign Commercial General Liability
    • Foreign Commercial Property
    • Foreign Voluntary Compensation
    • Foreign Auto Liability
    • Kidnap and Ransom
    • Political Risk
    • Commercial Crime
    • Directors and Officers

    So, what are you waiting for? Go take advantage of the growth opportunities in the global marketplace, but remember to manage your global risk wisely!

     

    By Gwen Luu, Director – Commercial Lines

     

  7. If A Tree Falls…

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    By Robin Manougian, Vice President – JMI, a JGS subsidiary

    Named storms aside, seasonal storms can pack a wallop that can lead to not only damaged property but also discord among friends and neighbors if the handling of downed trees is not understood or done properly. This past summer’s storms resulted in a fair amount of damage in a number of areas across the country, and so it should come as no surprise that agents and carriers were besieged with calls about downed trees. But the financial question of whose responsibility it is to insure the losses and clean up the debris from uprooted trees and limbs is always a hot, if not perplexing, topic.

    The old saying goes, “If a tree falls in a forest and no one is around to hear it, does it make a sound?” It does. And the ruckus it causes is more than audible when the tree falls onto someone’s property, though bickering and a litany of frustrated questions are more likely the sound you’ll hear.

    First, the easy claim: if a tree falls onto covered owned property (a home, a building, a fence, etc.), the policy will pay to repair or replace the damaged property (less the policy’s property damage deductible) as well as “your reasonable costs” to remove the tree, though insureds are encouraged to check with their agents for individual policy language limitations on debris removal.

    The debris left behind by trees that simply fall on the ground without damaging covered property is typically considered a maintenance issue and not an insurance loss. If covered property wasn’t damaged by the fallen tree, and the tree simply falls onto the ground or is brought down by an “Act of God” such as a storm, the cost to remove the tree is the responsibility of the owner of the property.

    But what about trees that fall onto someone else’s property? Home and business owners understandably cry foul when a tree on someone else’s property falls onto their own, and the inclination is to ask the tree’s owner to come clean up their tree. Unfortunately, what was once your neighbor’s tree now has become your tree—and your mess to clean up.

    Certainly good neighbors may feel compelled to share in the cost of removing a tree that’s fallen, but the easy way to remember who pays after a tree falls from an “Act of God” (i.e., a tree that falls because of wind or weather-related occurrences) and not because of any problem with the tree is that the owner of the damaged property pays:

    • If the tree belongs to you and falls onto your own property but didn’t damage any covered property, you pay to have the tree removed (maintenance).
    • If the tree belongs to you and falls onto and damages your covered property, your insurance covers the loss, less your policy’s deductible. Insurance will also likely pay the debris removal costs, sometimes at a percentage of the loss. Check with your carrier to see how your specific policy language is written.
    • If the tree belongs to you and it falls onto your neighbor’s property but does not damage covered property, the neighbor pays to have the tree removed (maintenance). You would be responsible for cleaning up any debris remaining on your own property and any stump removal.
    • If the tree belongs to you and it falls onto a neighbor’s home, shed, fence, or other real property, the neighbor’s insurance policy would respond to the claim, provided the tree was not dead or dying (liability).
    • If a tree falls onto a vehicle—whether your own or someone else’s—the owner of the damaged vehicle’s auto insurance policy will respond to the loss (filed under the auto policy’s comprehensive coverage).

    Where live property coverage is concerned, insureds should also check their policies for the existence of coverage and the limit provided. Should a live tree be struck by lightning, for example (a covered peril), the property policy would pay for the tree subject to the policy limits for live property, but coverage may not apply for removal of the tree if covered property was not also damaged. In addition, live property is limited to named perils: fire, lightning, explosion, riot or civil commotion, and aircraft or vehicular damage. Broader policy forms may also include vandalism, malicious mischief, and theft. Wind and hail losses are excluded under most property forms.

    Consider a homeowners association scenario where a tree in the common area falls onto an individual home: unless the tree was dead or dying, the homeowner would seek recovery from their homeowners policy, including the cost to remove any debris. Damage to the tree owned by the association would be covered under the association’s live property limit, provided the tree was damaged by a covered peril.

    That said, there is a clear delineation of liability. In cases where a resident has advised the association of concerns that a dead or dying tree may fall on their property, it is advisable that the association have an arborist check the health of the tree and have it removed immediately, if necessary. Diseased or dead trees that fall from a common area onto adjacent private property would be a claim against the association’s liability policy and not the individual homeowner’s policy. In addition, trees that are dead or dying can also lead to bodily injury claims, another reason to make certain that owned trees are inspected regularly and any problem trees are removed promptly.

    The same holds true of dead or dying trees on private property. Suppose a neighbor advises another neighbor of concerns about a tree and the tree’s owner fails to do anything about it (negligence). If the dead tree falls (or its branches fall) and damages the neighbor’s property, the tree’s owner would be liable for the neighbor’s property damage and debris removal.

    While the rules on tree liability can sometimes seem to run perpendicular to common sense, it’s easiest to remember that insurance is carried to address financial loss of owned property. Unless property is damaged by someone else’s negligence, misuse, or neglect, the property owner’s policy is triggered to repair and replace the owner’s property following a loss.