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What are the four types of exposure? Include an example in each.
- Property - Community association property consists of:
- - real property (buildings & grounds)
- - personal property (inventory, furniture)
- Liability - Association is held liable (having legal or judicial obligation for costs or damages)
- - Property damage
- - Bodily injuries
- - personal injuries (libel or slander/ false arrest/ invasion of privacy/ wrongful entry/ malicious prosecution)
- Income - Associations generally receive most of their revenues from assessments. Others:
- - Clubhouse rental
- - Laundry
- - Vending Machines
- - Parking space rentals
- - Restaurants
- - a decrease in revenue can greatly affect funds available to maintain, preserve and enhance the association's assets.
- Personnel - An individual performing services receives an injury while working on behalf of association.
- - An employee injured on the job
- - A volunteer injured while conducting association business.
- - An employee of a contractor who is injured while working at or on association's property.
Name four examples of risk control activities with an example for each.
- Risk Control is process of taking actions to prevent accidental losses and their financial consequences.
- Exposure avoidance - avoiding circumstances that would expose association to a certain type of loss. (Under age child out of pool)
- Loss prevention - taking steps to reduce possibility of a potential loss (weekly inspections)
- Loss reduction - steps taken to reduce severity of a loss. (timely preventative maintenance)
- Segregation of exposures - establishing some type of backup to prevent a loss (keeping spare parts)
- Contractual transfers - entering into a contract that will transfer a portion of its legal responsibility for any loss (contracting for elevator or pool maintenance service)
What are the three core activities of a community association's board of directors? Define.
- Business - Primary business activities of association involve protection of its assets. Owned or responsible for.
- Government - Primary governmental activities of association involve interpretation and enforcement of it governing documents.
- Community - Primary community activities of the association involve maintenance and enhancement of social harmony. Resolving disputes among neighbors etc.
Explain what prudent business judgment is.
Even if association's documents are silent on insurance, board must exercise prudent business judgment under common law.
Explain the requirements for self-insuring as an association.
What are the requirements for insurance?
What items of property must a condominium association insure? What must a member insure?
- Since January 1, 2004:
- Association must provide primary coverage for:
- - all portions of property located outside the units
- - condominium property located inside units as such property was initially installed or replacements and quality and in accordance with original plans and specifications.
- - all alterations and additions made to condo property pursuant to FS 718.113(2)
- - all portions of condo property for which declaration of condo requires coverage by association
- Member's insure:
- - all floor, wall and ceiling coverings
- - built-in cabinets & countertops
- - electrical fixtures & appliances
- - water heaters & filters
- - window treatments (all kinds)
Describe the required steps in condo reconstruction under the insurance section of the Condo Act.
What are a member's responsibilities in maintaining his property in a condo?
Which government agency regulates insurance?
Office of Insurance Regulation (OIR)
Two professional organizations set audit standards requiring certain levels of insurance
- American institute of Certified Public Accountants (AICPA)
- Financial Accounting Standards Board (FASB)