PrimerFor Boards & Management Firms

214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641

10 point

Do Business With Knowledgeable Professionals Who Specialize In Cooperatives & Condominiums1. • Insurance Brokers/Attorneys/Accountants • Have each attend a board meeting each year to provide advice and guidance

Industry Associations, Educational Conferences & Media2. • The Council of New York Cooperatives & Condominiums- http://www.cnyc.com/ • The Federation of NY Housing Cooperatives - http://www.fnyhc.coop/ • Habitat Magazine & Educational Conference - http://www.habitatmag.com/ • The Cooperator Newspaper & Expo - http://cooperator.com/ • All of the above are resources for advice, guidance and references.

Directors & Officers Liability3.

✳ 70% of all D&O lawsuits are lodged in New York, New Jersey, Florida, Texas and California ✳ 65% of all Coops & Condos in New York City know of a situation that could lead to a suit against the Board

• A suit naming Board Members personally places them in financial jeopardy, as their personal assets are at stake. • All lawsuits must be defended regardless of merit and legal expenses are very costly. Legal expenses for discrimination lawsuits range from $100,000 to $500,000. • Many D&O suits are not for monetary damages! Court requests are made for “Injunctive Relief and Declaratory Judgement,” yet still must be defended. • Most common D&O lawsuits involve allegations of: - Wrongful Termination - Discrimination (Race, Religion, and Employment) - Defamation of Character - Breach of Contract - Renovations - Subleasing - Noise - Pets • Quality of coverage is paramount. • Managementfirmneedstobeinsuredunderthecontract.

Mackoul & Associates, Inc. 214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641

PrimerFor Boards & Management Firms

10 point

PrimerFor Boards & Management Firms

10 point

Homeowners Insurance And What Risks Shareholders/Unitowners Face If They Are Not Insured Properly 4. • Homeowners Insurance will provide coverage to restore and rebuild the unit as well as providing protection for the cost to replace their personal property. • Homeowners Insurance will provide coverage in the event of a covered claim for the extra expenses incurred by the owner and his/her family during the time of restoration to live elsewhere. • Homeowners Insurance will provide protection against being sued by the coop/condominium, other shareholders, or their insurance companies. • Homeowners Insurance will provide coverage for the cost of being assessed by the coop/condominium due to a covered claim that exceeds the buildings coverage.

Pay Attention To Insurance Company Loss Control 5. Recommendations On Life Safety & Security Issues • Emergency Lighting • Hardwired or battery operated smoke detectors in common areas • Locked entrances & exits • Sidewalks & walkways in excellent condition • Elevators level correctly • Panic bars to roof

Update The Building Electric, Plumbing & 6. Central Air Conditioning • Updatefromfusestocircuitbreakers-thenumberonecauseoffires. • Change to “S” fuses in units in the interim. • Plumbing updates - Must be systematic on all pre-war buildings. • Burst pipes will become an increasing problem. • Clean AC drain lines & pans to keep your building from becoming a sponge.

Transfer Risk To Commercial Occupancies7. • Require all commercial occupancies to maintain General Liability Insurance. • ObtainCertificatesofInsurancenamingthecooperativeorcondominium as an Additional Insured under their insurance each year.

Mackoul & Associates, Inc. 214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641

Contractors8. • No Insurance Equals No Entry!!! The coop or condominium mustobtainaCertificateofInsurancenamingthebuildingandproperty manager as an Additional Insured.• New York Labor Law places almost total liability on the building owners.• Shareholder/Unit-ownersmustobtaincertificatesnamingboth the owner and the coop/condo as an Additional Insured under the contractorʼsinsurance.• CertificatemustreflectGeneralLiability,includingProducts&Completed Operations Coverage, as well as Workers Compensation.• AHoldHarmlessAgreementinthecooperative/condominiumʼs favor should be signed by the contractor.

Donʼt Shop Too Much or Too Little9. • Every 3 years is a good rule of thumb unless a large (10+%) increase is pending or coverage is being non-renewed.• Raising the deductibles can be a source of premium savings.• Make sure a full comparison of both coverages and premium are provided.• Adequate coverage for Replacement Cost on the building and contents with Loss Of Income for one year.• Be aware of important supplemental coverages such as Broad Form Water/Sewer Backup, Earthquake, Flood and Building Ordinance.• Proposal should include Boiler & Machinery, Commercial Umbrella, Crime and Environmental Coverage.• ManagementfirmnamedasanAdditionalInsuredontheGeneralLiabilityandDirectors&OfficersLiabilitypolicies.

Indemnifi cation Clause For All Board Of Directors10. • Provide for reimbursement by the cooperative or condominium to Board Members for uninsured D&O legal expenses incurred.• YourmanagementfirmhasanIndemnificationClausewithcoops&condoʼs, so why not protect each member of the board in the same fashion?• MostIndemnificationClauses(draftedmanyyearsago)shouldbereviewed againinlightoftodayʼsclimateinthecoop&condoatmosphere.

PrimerFor Boards & Management Firms

10point

Mackoul & Associates, Inc.214 West Park Avenue | Long Beach, NY 11561 | Tel: (516) 431-9100 | Fax: (516) 431-4641