September2017

COMMON INTEREST COMMUNITY LEGISLATION AFFECTING

INSURANCE By Vincent J. Hager, CIRMS, President, JGS Insurance

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R ecently, I had the privilege of being selected to join the CAI-NJ Legislative Action Committee (LAC). Aside from the Managers Committee (which I would be happy to serve but am a little short on my credentialsJ), this was the only committee within CAI-NJ on which I had not previously served. It has been an eye opening experience to serve on this committee. You should understand the amount of work and effort that the volunteers of the LAC put into serving common interest communities interests. The legislative agenda is daunting each month, and they do it willingly and on their own time. I am honored to be work- ing with such a dedicated group of professionals. I wanted to bring to your attention three bills that affect Insurance and the common interest communities that you need to be aware of going forward. First is A3683. This bill was introduced by Assemblyman Daniel R. Benson out of District 14 (Mercer and Middlesex). This bill prohibits condominium associations from assessing insurance deductibles to individual unit owners or groups of unit owners. This bill is problematic to community asso- ciations and was opposed in its current form. The ability of community associations to assess unit owners for large

deductibles is an essential tool that boards must be able to utilize. There are many deductibles in an insurance policy. It is not uncommon for an Association to have a $5,000 primary deductible, a $5,000 per unit water and ice dam deductible, $100,000 earthquake and flood deductible, as well as many others. If an association were to have a $5,000 per unit water deductible, and the unit on the 4th floor has a pipe break that causes damage to the 3 units below, the association would have $20,000 applied toward the deductibles. If you remove the ability to assess unit owners to collect the deductible, then second mortgage lenders such as FANNIE MAE, will want to see reserves in the current budget to fund all of those deductibles in order to qualify for their mortgage lending.

Vinnie Hager is the President of JGS Insurance located in Holmdel, NJ. Vinnie has specialized in insuring Common Interest Communities for 28 years. He is a past President of CAI-NJ, and has spoken both locally and nationally regarding the unique insurance issues relative to Community Associations.

Courtesy CAI-NJ.

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