This brief overview of the Kappes Miller Risk Management, LLC Master Insurance Program is provided for your general information, but is not a substitute for actual policy verbiage, rights and obligations. It does not include all the terms, coverages, exclusions, limitations or conditions of the actual contract language. Naturally, all questions and claims should be reviewed based on specific and applicable policy language. Policy forms for your reference will be made available upon request.

Building and Contents. The building and contents portion of the Master Insurance Program is where losses and damage caused by perils such as fire, theft, vandalism, and/or water damage are covered. This is the building coverage for the common area and limited common area portions of the structures, including building items within the units that the Association has elected to insure and the contents coverage for the Association‘s belongings. For example, items such as the roof, siding, structural steel or wood framing, electrical wiring, insulation and the pipes between walls are all examples of the common area components of the building. Items owned by the Association that are not permanently affixed to the building are considered “contents”— such items as the Association's cabana furniture or pool skimmer, for example. Keep in mind that individual unit owners need to have a policy for their own belongings as well as the portion of their units for which they are responsible.

Deductible. The deductible is the dollar amount deducted from the amount paid by the insurance company on a claim that involves loss or damage to the building and/or contents. The deductible represents the portion of the total amount of the claim that is the responsibility of the Association. Higher deductibles are good for the Association's loss history and in most cases the unit owner's homeowners policy will handle claims within the deductible.

Earthquake. The earthquake portion of the Master Program covers losses and damage to the building and contents due to earthquake or flood. This is a substantial and often overlooked form of coverage that is very important in the Pacific Northwest.

General Liability. General Liability insurance exists as a means of either paying for damages and/or injuries to others caused by the Association or paying legal costs to defend the Association against a claim. “Damages” and “injury” can take many forms and have many meanings. Naturally, certain policy restrictions and conditions do apply. In general, this coverage exists to cover bodily injury, property damage, pain & suffering, and/or loss of income for the harmed individual. Coverage applies for claims arising from common or limited common areas. Claims arising from within a unit are generally the responsibility of the unit owner's homeowners insurance.

Liability Umbrella. This can simply be thought of as higher limits of liability insurance protection. Instead of paying the premiums to increase your basic limit of general liability, and auto liability or director's and officer's liability, it is usually much more cost-effective to buy a liability umbrella policy to protect the Association from higher claims. We have found that Associations tend to underinsure their liability exposure, and an umbrella liability policy is the most cost-effective way to obtain additional protection. For example, a serious accident happens on Association property for which the Association is deemed liable. The underlying general liability policy limit is subsequently exceeded. The umbrella policy then steps in to cover the additional amount of the claim.

Ordinance/Law. Construction materials, standards and local ordinances are constantly changing and evolving. What may have been "up to code" when a building was first constructed may not be so today. For example, a fire occurs that destroys half of a building. The local "powers that be" mandate that, for whatever reason, the entire building must be leveled to the ground (as opposed to simply repairing only the damaged portion). Ordinance/Law covers the loss to the undamaged portion of the building, including demolition and debris removal. Also, coverage is in place for the increased cost to repair or replace an item that is no longer "to code." For example, a fire damages the building's electrical wiring. The damaged wiring is made of aluminum. Current code does not allow aluminum wiring. This coverage would pay the additional cost associated with using modern copper wiring. Other common upgrades required are "hard-wired" smoke detectors instead of battery units, sprinklers, or wheelchair accessible units.

Electric Data Processing. This is an additional coverage, created to "fill in the coverage gaps" often associated with personal computers. Traditionally, a standard property policy has exclusions such as "power surge," "property in transit," "mechanical or electrical breakdown," etc. With Electronic Data Processing (EDP), such exclusions are removed. Another benefit to this coverage is that the extra expenses associated with a breakdown—the cost of off site data processing while the computer system is being repaired, for example—are typically covered.

Boiler, Electrical & Machinery Breakdown (Boiler & Machinery). Traditionally, this unique form of insurance was thought of as simply covering "steam boilers." The modern Boiler/Machinery policy has evolved to a very comprehensive form of coverage. Today, Boiler/Machinery coverage insures all mechanical, electrical and pressure equipment for claims arising out of an "accident" (as defined in the policy) which is located on the insured premises. "But aren't these things covered in the Building & Contents coverage anyway?" Good question. Yes, they are, for most types of claims, but like EDP coverage, a Boiler/Machinery policy is very broad as to what "causes of loss" are covered and has very few exclusions.

Fidelity. "Fidelity" coverage can basically be thought of as employee dishonesty and embezzlement coverage and for Condominium Associations. It also covers volunteer board members. Again, as with most coverages included with the Master Insurance Program, for most Associations, policy limits are much higher than what is now in place with the existing insurance company. Higher limits, more protection.

Directors/Officers Liability. This coverage protects the Directors and Officers of an Association against liability allegations arising out of their "wrongful acts." Like the General Liability coverage, not only is there coverage for damages but also for defending against the allegation or lawsuit.

Auto Liability (Hired/Non-Owned). Associations typically don't own any vehicles, but they can be exposed to liability claims nonetheless. If the "auto" is owned by an employee or Board Member (including employee's or Board Member's family members) and used to run an errand or attend a meeting on behalf of the Association, this coverage will protect the Association if it is sued. Another example is a rented moving van that is used to transport the lobby furniture to the upholstery shop. This provides liability protection for the Association.

Employee Benefits Liability. This coverage is for the liability arising out of the failure to properly administrate employee benefits. For example, a new security guard is hired (directly by the Association as opposed to hiring a security firm) but the Board neglects to add her to the existing health insurance program. Later, a grave illness is contracted and the employee quickly learns she is without coverage. The employee then sues the Association. Employee Benefits coverage would serve to compensate the harmed employee and/or provide a legal defense on behalf of the Association.

Loss Control Services. One of the ways the Master Insurance Program is able to secure such low rates is by working closely with the insurance companies to ensure a high level of safety at each property. This is accomplished, in part, by on site visits by national loss control specialists. These experienced professionals not only provide a valuable service that helps keep insurance rates down, but more importantly, they give valuable suggestions as to how to create the safest living environment possible for our valued clients.