Page 6 - The NY Cooperator August 2020

6 THE COOPERATOR — AUGUST 2020 COOPERATOR.COM to have to see how the claims come across the at the community amenity,’ it’s going to be dif- table and determine how to resolve them.” Wayne Dow, also a partner with JSG In- surance, sees some uncertainty in how carri- ers are reacting and will react to the current situation. “In my experience, for insurance carriers it’s always been a matter of looking at corporations, especially in urban settings the coverage. Look at the facts of the claim, where property tends to be more vertical try to make it fit the coverage, and then figure than horizontal, another insurance compli- out the response at that point. I don’t think cation raises its head: lack of rent payments the carriers are sitting in their offices trying to from non-resident sources. In other words, a figure out how to disclaim coverage. I believe restaurant on the ground floor that normally this pandemic has been something that obvi- ously no one expected or accounted for. In my month, covering a substantial portion of the discussions with carriers, they view this as a community’s operating budget, has slowed new situation. And I think everyone is trying down—or closed down entirely—as a re- to remain calm and try and figure out what sult of the pandemic. Many businesses carry claims are going to look like, how they’re go- ing to come in, and how they should be mea- sured.” Carrier Response Four months into the pandemic, claims are beginning to come in—and policyhold- ers are beginning to see what considerations interruption coverage. It’s in there, it’s on the insurance companies are taking with respect policy. Only problem is getting to it. All that’s to existing policies and COVID-19. “We’re needed is the proper key to unlock the poli- expecting an influx of claims,” says Flem- ing, “but truthfully, what I’ve been saying for event is a cause of loss. Without that cause of the last few months is that right now we are loss, we struggle to get access to that coverage. ‘pregnant’ with claims, but in a symbolic nine I actually read an article yesterday morning months we’re actually going to give birth to about how lawsuits from insureds versus in- those claims. To date, we haven’t seen CO- VID-related claims come through in bulk. they’re trying to trigger that business income What we’re seeing more of right now is on the coverage. Businesses are saying they have the commercial side of things—business inter- ruption and workers comp–type claims.” According to Fleming, “We are expecting existence of COVID, the state not allowing to see claims that struggle to prove causation, them to open—all of these situations. They’re that basically maintain that they believe the saying these events should have triggered the insured contracted the virus at a community business income coverage; the carriers are location, in one of the amenities. We believe saying, ‘no, we don’t see the trigger.’” carriers are going to have a very direct re- sponse to those claims.” For his part, Dow stresses that “as phased tance on the part of insurance carriers to all reopening continues, you may start to see kinds of insurance claims for the foreseeable those claims develop, but I think it’s going future. to be one of those issues where we may see a ‘shotgun’ approach. Carriers are going to be minium associations are at risk of getting seeing all kinds of stuff—from discrimina- tion claims to harassment in the actual cases morass. Whether an insurance claim results themselves. And it’s at that point when I think from an individual claiming to have con- insurers are going to sit back and look at these tracted the virus through some perceived claims. I’m sure they’ve looked at their cov- erage forms and tried to figure out exactly corporation, or as a result of civil action that how best to respond, but there’s going to be a closed down a business whose monthly rent measured response by all carriers on all lines represents an important component in the of coverage affected by this. I think because community’s financial and operational plans, of the fact that things aren’t completely open it’s ultimately the shareholders or unit owners in some locations, and the possible ramifica- tions of events in those that have opened, we ficult situation may be made even worse by haven’t yet seen exactly what we’re going to be competing self-interests. looking at in terms of claims.” Fleming adds that “there’s already some pretty specific verbiage in most general li- ability policies talking about virus, bacterial pathogen, and biohazard exposure, and the exclusion of defense. So in the absence of that, there are some other caveats that carriers are going to that indicate that they are really go- ing to dig in their heels. At the end of the day, if somebody says, ‘hey, I contracted the virus ficult for them to prove that that actually oc- curred, unless they lived in a bubble with no one else and went only to that amenity.” Non-Health-Related Claims For some condo associations and co-op pays the association or co-op $40,000 per what’s called business interruption insurance to cover their rent in this possibility. Many landlords also carry rent interruption insur- ance. But what if the insurer won’t pay? Fleming says that right now, it’s a difficult gray area. “It all depends on triggers. This is cy benefits. The insured must show that the surance carriers are in the hundreds, because coverage. They’re claiming all sorts of trig- gers, whether it’s civil authority, or just the Both Dow and Fleming say they expect to see a growing—and consistent—level of resis- Clearly, co-op corporations and condo- caught in the middle of this potential legal negligence on the part of the association or left holding the bag. An already tense and dif- n A J Sidransky is a staff writer/reporter for The Cooperator, and a published novelist. INSURANCE... continued from page 1 on the ins and outs, the do’s and don’ts first meeting, the new member will re- of the building? Turns out, just as indi- vidual properties have their own cultures supporting documents, and the financial and challenges, they also have their own statements. These should be reviewed be- processes for orienting new board mem- bers—though of course, there is also a formed questions and contribute ideas or lot of overlap, even across regions. The Cooperator spoke with several multifam- ily management and administrative pros ality is an important issue that needs to be across the country to find out how their understood by new members. “They need communities make sure new board mem- bers hit the ground running. Management Training Michael Pesce is the president of As- socia, a large real estate management come before the board. Documents or firm based in New Jersey that handles other information don’t get shared with properties up and down the East Coast. a neighbor or any others outside of the “I do the training for our newly elected board.” boards personally, with the assistance of our community managers,” he says. “I use a template outline that’s then customized withal or resources to provide a profes- for each of our managed communities.” sional level of training to new board The template includes sections on fidu- ciary obligations, legal governing docu- ments, board responsibilities, insurance, board members to provide a more per- and transitions. “The goal is to do more sonalized level of orientation to new ones. than just a typical review of responsibili- ties—it’s to provide a roadmap for new board members to know where their power comes from, and what constrains it.” Daniel Wollman, CEO of Gumley Haft, a management firm based in New York City, has over- seen the induction of new board members hundreds of times on hundreds of boards in his 30 years of managing coopera- tives and condominiums. He also makes specifics and makes use of outside re- himself available to new board members. sources to give them a more general un- “A new board member needs some orien- tation,” says Wollman. “They can call me, or meet with me, and I explain the issues with whoever is joining the board to talk of the building—what’s currently going about our ongoing projects, the roles on, the nuances of different matters, proj- ects, staff issues. It gives them insight to participate,” says Anne. “We do also re- beginning their service.” However, along quire that new board members attend the with the guidance, Wollman has some CNYC”—Council of New York Coopera- words of caution for new board mem- bers as well: “Don’t come with a personal new board members, which is held at least agenda. Come with a view that you are annually—and which may be easier \\\[to at- contributing to benefit the whole build- ing.” Wollman also advises new board new member to thinking about the finan- members that “the best thing a new mem- ber can do, just like in any new job, is board members are encouraged to speak to observe. New members need to learn with current and former board members their board’s procedures, ongoing proj- ects, and priorities. To do that, the new board member should read and be fa- miliar with the building’s board min- utes—that will inform the new member on current matters in the building, house rules, and bylaws. Before attending their ceive an agenda, a management report, fore the meeting, so they’re able to ask in- perspectives based on the facts.” Wollman also stresses that confidenti- to respect the confidentiality of financial documents submitted by purchasers, or any other shareholders and unit own- ers, as well as any other matters that may Smaller Properties Not all communities have the where- members. Smaller associations and cor- porations may have to call upon existing Anne S. is the president of a 56-unit co-op in Upper Manhattan. She has served on the board for about a decade. The tight- knit community has a live-in super and a managing agent, but in an ef- fort to keep costs down, they don’t have the manager conduct a formal orientation for new members. In- stead, Anne herself orients newcomers on the building’s derstanding of how co-ops are run. “I usually have a long conversation on the board, and the requirements to tives & Condominiums—“workshop for tend\\\] this year because it will be done vir- tually. I find that this helps to orient the cial health of the co-op over time. New as well, to learn about how it all works. WHAT NEW BOARD... continued from page 1 continued on page 7 “Honestly, I was out of my depth for the first year. ... I found it took me a year of just listening to understand what was going on.” —Anne S.