2/4/03 HISTORICAL MEMORY
This page is designed to be the Historical Memory of the Marina at The Bluffs Condo Association. As new residents come and go it is not uncommon for the same ideas to come up from time to time and no one seems to remember that they have been previously explored by former BODs and committees. This site will be a permanent one in which such ideas can be laid to rest. This does not mean that they may not warrant examination at a future date – after all, EVERYTHING changes over time.
We start the graveyard with the Self-Insurance idea which
recently resurfaced because of our escalating insurance premiums.
The first piece is a boiled-down version of what our insurance agent Keith
Carroll told the public BOD meeting in January about Self-Insurance. The second
piece was written by Renee Bergen and explores some hypothetical ramifications
of Self-Insurance.
BOD Meeting Jan. 30, 2003.
SELF-INSURANCE
Our insurance agent Keith Carroll explained at length what is going on with the
ever rising premiums for our coverage with the conclusion that there is nothing
he or the Association can do to change these costs materially and will just have
to wait until the marketplace settles out, and hopefully, rates start to ease.
He also gave his opinion that self-insurance was NOT the way to go since it
would expose all of us to great financial risks if a major hurricane should hit
us. In addition, he said we would find the banks unwilling to issue mortgages.
[Note: I believe the same applies to personal property and apartment insurance.]
This information should put to rest the "Let's self-insure" idea which seems to
surface periodically.
2/3/03
THE GORY DOLLAR DETAILS
With reference to your e-mail of 1/7/03 requesting that I write a piece for the
website underlining the impossibility of the self-insurance idea. I deliberately
withheld doing so since I was made aware by Don Hester that our Agent, Keith
Carroll, had been invited to our January [BOD] Meeting.
I felt he did an excellent job of explanation but I KNOW there will
still be some well meaning residents who will continue to harp on the concept of
our becoming self-insured. I have not kept abreast with the current amount of
insurance on any one building, but let us assume it is in the neighborhood of
$2,000,000 to rebuild. As Keith explained, we would each have to produce an
immediate payment of $66,666.00 PLUS the cost of demolition of the entire
building and removal of debris, PLUS more if the Town requires better
construction due to zoning. So, it could conceivably
require us to 'pony up' cash upwards of $100,000 to start rebuilding. If even
one owner fails to provide that payment the other 29 owners in the building will
have to contribute for the shortfall. In insurance policies carried by the
Association there is a Replacement Cost endorsement included, which means that
the Company's payment would not be on the basis of depreciated value of our
aging buildings, but at Replacement Cost, or cost new. However, there is a
clause in the policy that the reconstruction process must be initiated within
timely fashion or else we lose that benefit. So, if there is any delay in
starting the reconstruction the insurance policy coverage drops down to "Actual
Cash Value" which means depreciated value. I guarantee you that there is no
building in our complex with 30 owners in the building who would be able to come
up with that amount of cash immediately and we would not be able to get back
into our homes. I am personally aware of a condo building in Destin, Florida
that had that problem and the building was never rebuilt for three years! There
also would be the problem of what to do with the
mortgagees. They would probably call in their mortgage to be repaid
immediately because there is no insurance fund to make their collateral whole
again.
Have a nice day,
Renee Bldg 2301 unit 206