Cohousing-L Mailing List: Re: How much liability insurance do other cohousing communities carry?

[R Philip Dowds (rpdowds]

How much insurance ... ?

Something didn't go right — and now I'm hurt, or have suffered a loss.  Sure 
can't be my own fault, it must be somebody else's fault.  Probably the fault of 
somebody else with money, who now owes me something.

That is the sorry state of liability claims in America today, and there's no 
evidence that this will soon change.  Living in a such a world, what's the 
right answer for insurance?  Cornerstone carries insurance as follows:
Hypothetically, the full replacement value of all 32 units in the invent we are 
somehow completely destroyed.  Howvever, this is mostly about fire damage — a 
risk, since we are fully sprinklered, that is really quite small.  However, we 
have chosen to exclude damage related to flood (a highly specialized and tricky 
definition), and to earthquake (low probability, we guess …but wait a minute, 
wasn't that a serious earthquake in the Washington DC area just a few weeks ago 
… ?)
General liability insurance in the amounts of $1mln per evet and $2mln per year 
… But wait a minute, that number means almost nothing unless you read the fine 
print of the policy, which will have embedded within it all sorts of 
exclusions, deductibles and contingencies.  If you pay attention and bargain 
well, you can get some of these weasel clauses out of your policy, but then you 
will pay more for it.
In other words, stating a number is almost entirely without meaning unless you 
know all the terms and conditions of the policy.  The basic principle of 
insurance actuaries is this:  If it probably won't happen, then insurance will 
be cheap.  But if there is a reasonable probability that it might happen, then 
insurance will be expensive.  Read the fine print.

I am not qualified to advise you or anyone else re how much insurance to carry; 
you're on your own for that.  But some things to consider are:
Insurance is meant to forestall utter disaster, not indemnify you against any 
and all adversities in life.  So set your deductible as high as you reasonably 
can.  How much could your community afford to pay, in the off chance something 
goes very wrong?  If you could, under duress and emergency, pull together a 
special assessment of $50K, then maybe that's the right number for your 
deductible.  Conversely, if even $5K would be hard to come up with, then maybe 
that's your deductible — but your policy will cost much more.
Make sure all the vendors working on your property — the cleaners, the 
painters, the appliance fixers, the candlestick makers — work for companies 
that carry their own worker's comp and liability policies ... and keep copies 
of their insurance certificates up to date and on file.  This means that if a 
worker gets hurt on your premises, his/her first recourse for restitution is 
from an intermediating employer, not from you.  The uninsured self-employed 
person is always cheaper by the hour — but this is exactly the kind of person 
who may file a claim against you, and win.  If this is the person you like to 
hire, then keep your liability and worker's comp policies in especially good 
order.
Work to eliminate hazards, especially for visitors, children and the elderly.  
So what happens on residential properties, anyway?  At the top of the list are 
slip and fall, usually due to improperly built stairs, irregular pavings or 
ice, loose rugs without friction pads, and debris (toys, empty boxes, etc) left 
in poorly lighted pathways.  Then there is the issue of sharp knives or 
dangerous tools left lying around.  Then there is faulty electrical wiring 
(ga-ZAPP!).  But the list is not endless; the list is in fact predictable and 
manageable.  If you devise and implement a community safety plan ("Risk 
Assessment"), two good things happen:  (1) you actually reduce the probability 
of somebody getting hurt; and (2) claims against you for negligence are easier 
to defend.
If you have a good insurance agent, s/he will be willing to review all this and 
more with you.  Good luck.

R Philip Dowds AIA
Cornerstone Cohousing
175 Harvey Street, Unit 5
Cambridge, MA 02140
617.354.6094

On Oct 14, 2011, at 2:21 AM, S. Kashdan wrote:

> 
> Hi all,
> 
> Here at Jackson Place we are currently going through our annual budget
> determination process. As part of this, we are looking at our liability
> insurance coverage to see if we have enough. Alternatively, we may decide 
> that some of our liability insurance is unnecessary, and drop it, which 
> could lower our 2012 budget.
> 
> So, we would find it helpful to know how much liability insurance other
> cohousing communities carry.
> 
> Thanks much for whatever you can tell us.
> 
> Sylvie Kashdan
> Jackson Place Cohousing
> 800 Hiawatha Place South
> Seattle, WA 98144
> www.seattlecohousing.org
> 
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