The property and liability insurance covering the parts of the Las Mañanitas complex not owned by Owners of individual Units is expensive. The premiums are $135,500 USD, the single largest line item in the budget. That's a $4,000 USD increase from last year, but we doubled liability coverage and tightened some deductibles. Here are the details: (See also the legal disclaimer at the bottom of this post.)
The Review Process
You have a new Board this year, unfamiliar with the intricacies of condominium insurance. Luckily, Board Advisors Anne Creaser and Darrell Seigler were willing to orient the new Board members to the information they needed. Speaking personally, I've bought an "Owner's Policy" for my individual condo Unit but never coverage for the whole condominium complex. So some of the terms and conditions were new. Here are some highlights of the process:
What Properties Are Covered?
Buildings. Obviously, the main buildings in Phases I, II and III are covered. All the garages are covered. The HOA owns a few other buildings -- the Gym, the 'Cafeteria," and the Annex (where the Casago office is)
Fixtures. Each of the Phases has "fixtures, " defined as items attached or annexed to real property, including things like the palapas, pools, sidewalks, grills, banos, sidewalk lighting and even the sculptures adjacent to each Phase. The Common Areas have fixtures, too, e.g., the perimeter fence, front gates, tennis court, etc.
Equipment. Pool pumps, elevators, propane systems, the electric arm at the front gate, etc. is covered equipment. Any moveable personal property (e.g., pool chairs, tables and umbrellas) must be stored during storms in order to be covered.
This is not exhaustive. There are subtleties like "subsurface structures" (e.g., pool pump house for the pool). Frankly, I'm not sure about the pools; there we don't need to worry about fire or hurricane. But how about earthquake? We may be self-insuring any damage there.
What Perils Are Covered?
Definitions. Each of the perils covered is described in terms of the "Covered Amount," and claims will be paid with a "Deductible" and "Co-Insurance," which is like the co-pay that you pay on medical insurance claims. For example, a 10% Co-insurance means the insurance carrier pays 90% of the claim after subtracting the Deductible (and Las Mañanitas absorbs 10% of the claim).
Fire. We are insured for $24.3 million USD Covered Amont, with no Deductible and no Co-insurance for Buildings. For Contents, the Covered Amount is $433,000
Hurricane. For Buildings, we have the same Covered Amount, but with a 5% Deductible and 10% Co-insurance. For Fixtures that are not part of a Building, the Deductible is 15% and the Co-Insurance is 20%.
Earthquake. We do live in an earthquake zone, so we have the same $24.3m USD Covered Amount. The Deductible is 2% and the Co-insurance is 10%.
Liability. $2,000,000 Covered Amount for property damage and personal injury with 10% deductible and no Co-insurance
Lots More! See the summary quote sheet and related "explanation of the policy (English)" in our MASTER file here.
Renewal for Next Year
Frankly, the process for this year was limited owing to a) a new board, and b) a compressed schedule. Our broker did a reasonable job in getting us some competitive quotes, one of which was attractive but from a carrier whose reputation for claims handling we could not verify and whose contract we could not review prior to the deadline. So, we took the same program we had last year with slightly higher Covered Amounts.
But next year ... next year will give us an opportunity to start at the basics and see if we can get adequately insured for less money. I'm pleased to announce that former President Lee Corkrum has agreed to lead the effort. As an insurance defense civil litigator, Lee knows his way around insurance contracts, and he knows Las Mañanitas better than almost anyone else. He also was close to the Odile claims administration process. If you see Lee, please thank him for this very helpful service.
Disclaimer. Nothing in this summary is legally binding. Only the actual contract with the insurance carrier is binding, and then only the Spanish version. I am not a lawyer. I don't speak Spanish. So the report above is my understanding after talking with our broker, reading some of the English language marketing materials from the carrier and collaborating with prior board members about past practices. I believe the above summary is accurate, but I can't guarantee it.