If you're a condo or co-op board member, you've likely noticed changes in how insurance companies handle loss recommendations. In the past, these were often viewed as helpful suggestions. But the landscape has shifted, and now these recommendations are really seen as mandatory requirements for maintaining coverage.
Understanding loss recommendations
First clarify what loss recommendations are. Also known as loss control recommendations, these are suggestions provided by insurance companies to reduce risk in your building. Whether you're overseeing a large condo or a small 2-4 unit building, these recommendations apply to your role on the board. Let's break down what this means for you and your building.
Why the shift?
The insurance market is getting tougher. Insurance companies are looking for ways to lower their risk. To do this, they're focusing more on advice about preventing losses when they decide who to insure and how to handle policies.
- Urgent recommendations: Some suggestions are marked as urgent. If you don't handle these quickly (sometimes within a month), your insurance might be canceled.
- Non-urgent recommendations: Even the less urgent suggestions are important now. If you don't do these by the time your insurance needs to be renewed, the company might not renew your policy.
Impact on your condo or co-op building
Keeping your coverage: Following through on recommendations is now key to maintaining your coverage. If you don't keep up, you might find yourself struggling to find new insurance, which can be both challenging and costly.
Controlling costs: Taking care of these issues now could protect you from significant price increases later. Think of it as an investment - a bit of effort today can lead to better rates and easier renewals down the road.
Building safety: Many of these recommendations actually help keep your building in good shape. By following them, you're not only satisfying your insurer but also creating a safer environment for your residents in your building.
What can trigger a loss recommendation
Insurance companies issue “loss recommendations” when they see conditions that increase the likelihood of a claim. These aren’t always major problems. Small maintenance or safety issues can be enough to put your coverage at risk if they’re not addressed.
In NYC’s hard insurance market, even minor violations can tip the scales. According to Habitat Magazine, some buildings have seen premiums double after insurers reduced capacity or refused renewal due to unresolved safety concerns.
Exterior hazards
- Roof damage such as loose flashing or ponding water that could cause leaks
- Deteriorating façades or balconies
- Cracked or uneven sidewalks and exterior stairs
- Missing or broken handrails at entryways or rooftop access points
Safety and compliance issues
- Missing, outdated, or damaged safety signage in mechanical areas, stairwells, or near hazards
- Inoperable or expired fire extinguishers
- Blocked fire exits or cluttered hallways that could impede evacuation
- Non-functioning emergency lighting
General maintenance risks
- Water damage or leaks in common areas
- Poor lighting around the building perimeter, increasing security risks
- Debris or clutter in mechanical or boiler rooms
Strategies for addressing loss recommendations
It's important to take loss recommendations seriously, and approach them strategically. Here’s some key steps for boards and management to consider:
- Thorough review: Examine each recommendation carefully to understand its rationale and potential impact on the building.
- Documentation: Maintain detailed records of the condo or co-op building’s current condition, including photographs, inspection reports, and expert assessments.
- Prioritization: Develop a system for prioritizing recommendations based on urgency, cost, and potential impact on resident safety and building integrity.
- Challenging recommendations: When appropriate, prepare well-documented cases to challenge recommendations that may not be applicable or necessary for your building.
- Communication: Keep unit owners informed about significant recommendations and how they might affect the building or individual units.
- Expert consultation: Seek professional advice to properly interpret and implement complex recommendations.
Turning recommendations into results
Loss recommendations are no longer just suggestions - they're now a key part of keeping our buildings insured. By taking these recommendations seriously, you'll actually be making your building safer, more valuable, and easier to insure. Use these guidelines as a roadmap to help make your building a better place to live.
