Sometimes insurance and the terms that accompany it can feel like a completely foreign language. It can be mystifying and overwhelming, whether for individual condo residents or the board members who oversee the community as a whole.
Knowing and understanding the key terms and concepts behind complete, well-designed insurance coverage can go a long way toward peace of mind and making sure that should the worst happen, homes and assets are protected.
Fortunately, there are experts in the field of insurance willing to share their knowledge and guide a motivated board, around the learning curve to a comfortable understanding of the best and most affordable options available in today’s market.
A Little History
The insurance industry is not a new business. As a matter of fact, the practice of spreading risk around to relive the burden on individuals dates back to the earliest Chinese and Babylonian societies. Property insurance as we know it today can be traced back to1666 in England; the first insurance company in Colonial America dates back to 1732. By 1752, Benjamin Franklin had standardized the practice of property insurance. However, the U.S. government did not mandate any form of insurance until the passage of the Social Security Act in 1935. After World War II, VA home loans were underwritten by the federal government to include an insurance clause as a means of protecting the banks and lending institutions against avoidable losses.
Where Does Responsibility Lie?
John Bickley III is a principal with the Chicago-based law firm of Kovitz Shifrin Nesbit in its Buffalo Grove office. Bickley is a former Assistant Attorney General for the state of Illinois, and has practiced law since 1978. His primary advice for board members in any community—co-op, condo, or HOA— is to review their specific governing documents to determine their community's obligation to insure, versus the obligation of individual residents to cover their own property. “A mistake in this regard may ultimately result in liability for the individual board members,” he says.