Module 2: Role of Insurance in Risk Management

Role of Insurance in Risk Management Focus: Implement risk management techniques in the risk management process.

Role of Insurance in Risk Management Module Objectives Identify important aspects of an association’s fact sheet Identify important request for proposal terms Identify and describe the various types of insurance coverage typically found in community association programs. Identify bid specifications for a insurance proposal Identify and define claim process terms. Identify perils of an incorrect claim process.

Role of Insurance in Risk Management The next step is to implement the risk management techniques selected by the board. This transfer of risk financing begins with the development of an insurance request for proposal, including an association fact sheet and bid specifications.

Lesson 1: RFP Terms and Fact Sheets

RFP Terms and Fact Sheets Lesson Objective Identify important aspects of an association’s fact sheet. Identify important request for proposal terms.

RFP Terms and Fact Sheets Activity #1: Discuss Insurance Terminology use in a RFP Purpose: To become familiar with the terms and concepts found in an insurance request for proposal for a community association.

Uses for an Association Fact Sheet Helps manager identify and evaluate exposures to possible loss—a risk management control. Demonstrates management’s ability to manage to the board, the agent, and the carrier. Provides an inventory of the association’s real and personal property that can be used for other purposes.

RFP Terms and Fact Sheets Activity #2: Association Fact Sheet Purpose: To become familiar with the purpose and content of an association fact sheet for insurance coverage.

Lesson 2: Insurance Coverage and Bid Specifications

Insurance Coverage and Bid Specifications Lesson Objectives Identify and describe the various types of insurance coverage typically found in community association programs. Identify bid specifications for a insurance proposal.

Insurance Coverage and Bid Specifications Common Insurance Coverages for Community Associations Property Coverages Liability Coverages Net Income Coverages Personnel Coverages

Workers’ Compensation/ Employers’ Liability Insurance Does an association with no payroll need workers’ compensation insurance? How is employers’ liability different from statutory workers’ compensation? How is employers’ liability different than employment practices liability?

Insurance Coverage and Bid Specifications Four Basic Questions to Ask About Insurance Coverage What or who is covered? For what events are they covered? For how much are they covered? Are there any qualifications to coverage?

Insurance Coverage and Bid Specifications Sample Partial Bid Specifications Commercial Package Policy Continue Fidelity Commercial General Liability (CGL) Directors’ and Officers Liability (D&O) Umbrella Liability

Insurance Coverage and Bid Specifications Activity #3: What to include in a Bid Specification for Insurance Purpose: To become familiar with the most common provisions that appears in bid specifications for community association insurance. To call attention to special provisions and issues this could be problematic for an association.

Bid Specifications Property Insurance

Bid Specifications Fidelity Insurance

Bid Specifications Commercial General Liability (CGL) Insurance

Bid Specifications Directors and Officers (D&O) Insurance

Bid Specifications Umbrella Liability Insurance

Insurance Coverage and Bid Specifications Monitoring a Community's Insurance Program Insurance is a contract. People are expected to be familiar with the contracts that they enter into. This holds for insurance.

Insurance Coverage and Bid Specifications Insurance contract should be reviewed: When the association first obtains a policy. When a change is made in the policy coverage during a term. When a policy is renewed. When a loss occurs.

Insurance Coverage and Bid Specifications Parts of an Insurance Policy Declaration Page Forms Endorsements Optional Coverages Common Policy Conditions Glossaries

Insurance Coverage and Bid Specifications Insurance Folder Assemble the insurance policies in the folder using the declaration pages as your guide Use the declarations page as a “table of contents” to locate the separate forms included in a policy

Insurance Coverage and Bid Specifications Think of an insurance policy as a reference document. You don’t sit down and read it cover to cover as you would a book. But you must be able to locate information in it—with or without your insurance agent’s help.

Insurance Coverage and Bid Specifications Activity #4: Organize an Insurance Folder Purpose: Small groups organize an insurance folder and locate major coverage provisions in an insurance policy

Lesson 3: Claims

Claims Objectives Identify and define claim process terms. Identify perils of an incorrect claim process.

Claims How does your association insure: On-Your-Own Association Side-By-Side Association Above-And-Below Association

Claims Does your list include all four types of exposure to loss? Property Net Income Liability Personnel

Claims Steps to Take When You Find Out About Any Potential Loss Protect life and property from further damage. Keep detailed and accurate records. Always tell the truth. Avoid saying anything that suggests the association or management is responsible for what happened.

Claims Restrict records to a description of facts. There are pros and cons to keeping records. Their benefit is that they help recall and support your version of a situation. They are a disadvantage if you have done something wrong—or failed to do what you should have done.

Claims How to Decide Whether to Report a Loss: Property Loss Employee Injury Liability Loss

Claims Liability loss An injured party’s prior condition is immaterial to the association’s liability for bodily injury—even though it may lead to greater injury and therefore greater liability. If an allegedly injured party makes a claim against the association’s liability insurance directly to the insurance agent, the agent must report the claim to the carrier.

Claims How much to confer with agent: Agent represents the carrier May have to act on information you divulge Vary in how they respond to privilege information Know your agent Explore issues in the abstract

Claims Self Insurance If an association decides not to report an actual loss, it is deciding to retain financing of the loss—or to self-insure it. Risk retention essentially is self-insurance.

Claims Sample Claims Report Fact Section Public Adjuster

Claims First Party/Third Party Coverage When the association makes a claim under its own policy, it is a first-party claimant. When the association makes a claim against another party’s liability insurance, it is a third-party claimant.

Claims Identify exposures to loss Analyze Review alternative risk management techniques Assist board to select Implement Monitor and improve risk management program.

Module Summary Focus: Implement Risk Management techniques in the Risk Management Process

Module Summary Module Objectives Identify important aspects of an association’s fact sheet Identify important request for proposal terms Identify and describe the various types of insurance coverage typically found in community association programs. Identify bid specifications for a insurance proposal Identify and define claim process terms. Identify perils of an incorrect claim process.

Discussion Questions What are some important aspects of an association’s fact sheet and bid specifications? Describe a time when you were involved in a claim process. What went well? What could have been improved upon? Name and explain the differing types of insurance coverage for community associations. Are there any types of coverage you believe your association needs? What can you do to start the process? What are some potential perils of an incorrect claim process? What is the most challenging aspect of risk management? Describe a situation you are struggling with and ask the members of your class for advice.

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Course Exam 50 questions Multiple choice Results will be mailed within 4-6 weeks, if not sooner Good luck!

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