Member access to a unit after a fire

When a member experiences a fire loss, whether it be a partial or total loss, the member may request that the cooperative grant him/her access to his/her dwelling unit to retrieve personal items, if any personal items can be safely retrieved. The concern here is that as a result of the fire, the unit is uninhabitable and structurally unsound and access should only be granted on a case by case basis. It is vital that in these unfortunate events the safety of the member is protected and the dwelling unit is preserved at all times until the unit can be repaired.

When a member requests access to his/her dwelling unit after a fire, the cooperative must take protectionary measures to ensure not only the safety of such access, but to ensure the safety of the dwelling unit as cooperative property.

When these unfortunate events occur, and once the cooperative ensures the safety of the affected members, secures the unit and contacts the fire department and insurance company, it should contact the cooperative attorney to draft a release and waiver of liability for the member to sign in order for the member to access the dwelling unit. The release and waiver of liability will not only work to protect the cooperative in the event that the member injures him/herself while accessing the unit, but it will also provide for the strict purposes that the member is allowed to access to his/her unit.

A member’s access must be limited to the retrieval of small personal items, such as a wallet, license, social security card or other vital documents. Large personal items such as televisions, furniture, etc., must not be moved. Most importantly, such access must not only be supervised by a representative of the cooperative or management agent and/or a representative of the police and/or fire department, but must only be granted when the dwelling unit has been determined to be accessible by the police and/or fire departments.

The member must understand that there are inherent risks involved in the accessing of his/her dwelling unit due to the structure not being structurally sound because of the fire. Said risks include personal injury or death and/or injury to or loss of property. As a result of such inherent risks, the member must agree to assume all risk and liability associated with his/her access to the dwelling unit for the limited and supervised purpose of retrieving his/her personal belongings.

The cooperative’s permission to grant the member access to the dwelling unit must solely be limited to the agreed upon date to enter the dwelling unit. The member must understand that he/she cannot enter his/her dwelling unit at any other time. Said restriction not only protects the member from injury, but protects the dwelling unit from suffering further loss.

The release and waiver of liability also works as a condition precedent for the member to be able to access his/her dwelling unit for the limited and supervised purpose to retrieve only the member’s requested personal items. The release and waiver of liability must also include protectionary such as the agreement of the member to waive, release and discharge the cooperative for claims arising out of the member’s access to his/her dwelling unit. Another important protectionary provision that must be included is indemnification. The member must agree to indemnify the Cooperative for any injury, damage causes of actions, etc., that may arise from the member’s access to the dwelling unit. The concern here is that there is a potential for personal injury, death, injury to property or the loss of use of the property as a result of the fire in the dwelling unit.

The loss of one’s home whether partial or total and the loss of one’s possessions are beyond devastating. We sincerely hope that no cooperative and its members have to ever endure such loss. In sum, in the event that a member requests access to his/her dwelling unit after a fire loss the member must effectuate a release and waiver of liability prior to accessing his/her dwelling unit in order to protect both the member and the cooperative.

Alyssa Gunsorek is an associate attorney with experience in contract negotiations. She has contributed articles for various publications including the MAHC Messenger, NAHC’s Housing Cooperative Quarterly, and Pentiuk, Couvreur & Kobiljak’s Cooperative Law Journal.

What a Board of Directors Needs to Know about Rain Barrels

Rain barrels are becoming a popular way to collect and store rainwater for lawn and garden watering. However, such installation and use of rain barrels does not come without issues for cooperatives. A cooperative Board of Directors must consider the following prior to permitting the installation of rain barrels on cooperative property:

The Board Must Determine the Location, Selection and Installation of Rain Barrels

Prior to a member installing a rain barrel, the Board of Directors must approve the location for the installation of the rain barrel. Board members should walk the property with a professional contractor who is experienced with the installation of rain barrels to determine the appropriate location for the rain barrels. Board of Directors should only permit members to use Board approved contractors to install rain barrels. It is vital that the contractor carry the required insurance and provide the cooperative with a current certificate of insurance before the installation begins.

The Board could also select the rain barrel, thus creating uniform rain barrel design, gallon use and height. The Board ought to make the purchasing and installation of the rain barrels the financial responsibility of the member.

Typically, rain barrels are installed outside and next to the exterior foundation of a unit and connected to downspouts. Rain barrels must not be installed on the roof, walls, chimneys, fences or in any common area. The rain barrel must also be placed on a pad such as patio stone pavers, concrete, etc., which must be level to the ground to catch water from the adjoining downspout. The Board must also determine the dimensions of the pad for uniformity purposes. It is vital that the placement of any rain barrel does not cause damage, present a hazard or present maintenance problems to the property.

A Board may find it wise to contact its insurance agent prior to adopting and implementing the installation of rain barrels to be sure that there will not be any denial of coverage.

The Board Must Adopt Strict Regulations for the Installation, Maintenance, Use and Removal of Rain Barrels

Boards must adopt a strict policy for regulating the installation, maintenance, use and removal of rain barrels. Below are examples of regulations that boards ought to adopt:

  • Members are responsible for all costs of purchasing, installing, maintaining, removing, cleaning, and storing the rain barrels;
  • Restricting members from installing rain barrels themselves;
  • Requiring that installation must not damage the dwelling unit;
  • Prohibiting drilling holes in railings, exterior walls, the roof, or any other location when installing the rain barrel;
  • Requiring that the rain barrel be installed in accordance with the Board approved location and specifications;
  • The emptying of rain barrels daily;
  • The emptying of rain barrels continuously during wet weather events to prevent flooding and damage;
  • The use of collected rainwater for gardening and landscaping only[1];
  • Ensuring that rain barrels’ spigots are tightly sealed at all times to prevent danger to children and pets as well as to prevent an attractive breeding ground for mosquitos and other insects that carry diseases;
  • Members are responsible for the maintenance of any rain barrel;
  • Ensuring that rain barrels are maintained in a clean, good working, visible and attractive condition to prevent a haven for mosquitoes or other pests;
  • The regular cleaning of rain barrels to prevent unpleasant odors;
  • The regular inspection of rain barrels for leaks;
  • A strict prohibition of a member to remove the screen inside the rain barrel, unless the member is removing the screen to clean debris;
  • Ensuring that if a hose is hooked up to the rain barrel, then the member must secure the hose after use to prevent tripping hazards;
  • For cooperatives that experience all four seasons, restricting the use of rain barrels to the spring and summer monthly only; specifically, the months of April, May, June, July, August, September, and October;
  • Ensuring member responsibility for the draining, cleaning and removal of the rain barrels during winter months or upon a member vacating the unit;
  • Ensuring that the member returns the downspout to its original condition during winter months or upon a member vacating the unit;
  • Strict enforcement provisions for repairs, including immediate emergency repairs in the case of health and safety hazards or imminent property damage;
  • Strict enforcement of a member’s non-compliance which would be considered a violation of the Occupancy Agreement and the cooperative’s Governing Documents and Rules, Regulations and Policies;
  • Fines for non-compliance, including possible removal of the rain barrel, and/or termination of membership;
  • Ensuring member responsibility for any and all damages that are incurred from installing or removing the rain barrel; and
  • Implementing a deposit to cover damage or expenses that may occur during installation, use or removal of the rain barrel.

The Board Must Adopt Liability, Insurance and Indemnity Regulations to Protect the Cooperative

It is vital that a Board adopt a provision that requires members to obtain liability coverage. The Board must require that members be liable for any injury or damage to persons or property caused by member’s rain barrel or the operation of the rain barrel. The cooperative must be held harmless in any claims for vandalism, injury or damage to persons or property caused by the rain barrel. The Board must require that the member obtain HO6 insurance, for the use of the rain barrel in the event of injury or damage to persons or property which must be in an amount reasonably determined by the Board of Directors to accomplish that purpose. The insurance must remain in force while the rain barrel remains installed.  The Board must also require that the member agree to defend, indemnify and hold the cooperative harmless from all claims related to the installation, use, maintenance and removal of his/her rain barrel.

In sum, rain barrels are becoming a more popular way to collect and store water for lawn and garden watering. However, as explained above, prior to the installation of any rain barrel, a Board must take many factors into consideration. As always, an experienced cooperative attorney will be able to draft a rain barrel policy that not only will allow for members to collect and store water for lawn and garden watering, but will also fully protect the Cooperative.

[1] Rainwater collected from the rain barrels should not be used for household consumption as rainwater is not safe for drinking and may contain pollutants, like bacteria or chemicals from roof systems.

Alyssa Gunsorek is an associate attorney with experience in contract negotiations. She has contributed articles for various publications including the MAHC Messenger, NAHC’s Housing Cooperative Quarterly, and Pentiuk, Couvreur & Kobiljak’s Cooperative Law Journal.

A Smart Step to Protect Your Co-op: An Overview of Certificate of Insurance

Your cooperative may rely on working with other businesses in order to succeed. But, that can leave the cooperative exposed because it can be held legally liable for damages if contractors do not have adequate insurance coverage. Doing business with vendors, buyers, contractors/ subcontractors and suppliers can have implications on the cooperative’s own insurance coverage and pose a serious threat to the cooperative’s financial health.

To protect your cooperative, it is important for you to work with only those who are adequately insured and can prove that coverage exists. And that’s where certificates of insurance apply.

What is a Certificate of Insurance?

A certificate of insurance verifies that someone wanting to do business with you has adequate limits of insurance and that the insurance is in force and current. Certificates are usually issued by an insurance agent or broker but also may be issued directly by an insurance company. A certificate is for informational purposes only and is not an actual contract between the certificate holder and the insurance company. A certificate is not a guarantee that the policy does not contain additional exclusions/coverage. Any contractor should be able to easily obtain a certificate of insurance by contacting his or her agent or broker.

It’s Important to Make the Request

When you are making the important decision of whether or not to work with a vendor, buyer, contractor/subcontractor or supplier, obtaining a certificate of insurance can provide a level of confidence as you enter into a contract with them. A certificate of insurance contains valuable information that can help businesses avoid major losses.

Keep the certificate on file. If a policy is set to expire before a contractor’s work is completed, you should request another certificate for the renewal policy.

Make Sure to Review the Certificate

Insurance requirements will often be written into a contract, but you may also want to supply a required insurance coverage form to the contractor or other party (see “Required insurance coverage” section in the right column). Always obtain the certificate before any work is performed. Most businesses require certificates before the contractor can even set foot on their property.

After obtaining the certificate, review it for the following information:

• The name of the insured;
• The proper coverage(s) being provided;
• The required limits;
• The effective dates; and
• Your name as the certificate holder.

Required Insurance Coverage.

Before providing a service or product to you, the party with whom you are doing business must provide a certificate of insurance that names you as the certificate holder and meets the minimum requirements listed below.

Please note: If the other party either does not provide you with a certificate of insurance or if they provide one with limits lower than the requested minimums, you should discuss this with your agent before work begins.

General Liability

$1 million each occurrence/$2 million general aggregate/$2 million products completed operations aggregate; $1 million personal and advertising injury each occurrence.

Workers’ Compensation and Employers’ Liability

$500,000 bodily injury by accident, each accident;
$500,000 bodily injury by disease, each employee;
$500,000 bodily injury by disease, policy limit.


$1 million CSL (combined single limits).

Umbrella liability

$1 million each occurrence.

For an explanation of how these limits would be applied in the event of an actual loss, consult with your agent.

What You Can Learn from a Certificate.

Most certificates of insurance are issued on an ACORD 25 form, a standard form used by the insurance industry. Here’s a brief description of each section of the form with a sample to review (below):

Identification Section

This section identifies the agent/broker, the insured and the insurance company providing coverage.

1 The date the certificate was issued by the agent/broker or insurance company.

2 The name of the insurance agent/broker. Their address, contact name and phone number should be listed in case you need to ask additional questions or confirm coverage. basics

3 The name of the insured. Be sure to verify that it is an exact match to the name of the person or company you are hiring.

4 The names of insurers. One insurer often provides insurance for all coverages, but at times, different insurers are used for different policies.

Coverage Section

This section lists the names of the insurers by coverage provided. Make sure the insurers meet your minimum requirements for financial strength and are reputable carriers.

5 The insurer for a particular coverage, keyed to the corresponding letter in item #4.

6 The type of coverage. Ensure that the person or company you are hiring has, at a minimum, general liability and workers’ compensation insurance.

7 Additional insured column.Verify that a “Y” appears to indicate you have been added as an additional insured for ongoing and products/completed operations. Best practice is to ask for copies of the additional insured endorsement to ensure that coverage complies with your insurance requirements.

8 The policy number. Identifies the number of the policy in force between the policy effective date and expiration date listed in the next two columns on the form.

9 The policy coverage dates. Check these to ensure they cover the period in which work will be performed. If a policy is set to expire before the job is completed, request another certificate for the renewal policy.

10 Coverage limits. Make sure the limits held by the contractor meet the limits you require.

11 Description of operations/locations/vehicles. Make sure you understand the meaning of any comments made here and how they may impact your project’s insurance program. Certificate Holder Section

12 Identification of certificate holder. Make sure your company’s name appears here.

13 Notification procedures if the policy is canceled. Ask to see the policy provisions or endorsements regarding how notice will be given, to whom, and how many days advance notice will be provided. Make sure they meet your contract requirements.

14 Signature of authorized representative. Make sure the certificate is signed here by the agent or other individual representing the person or company you are hiring.

Editor’s Note: When requesting the certificate, you should require that the cooperative be named as an additional insured. Neither this article nor NAHC proposes to give legal advice. Thus, the cooperative should consult with an attorney.

Reprinted with permission from Nationwide Insurance.

Weak Insurance Coverage Could Expose Boards

Purchasing insurance is indeed a complicated endeavor. All policies differ in their terms and conditions, and it is critical that the board spend quality time every year in assessing the cooperative’s coverages and getting the input of qualified advisors.

While many board members believe that the cooperative’s directors and officers liability insurance would cover them if there was a claim for inadequate insurance, this may very well not be the case.

The purpose of this article is to examine common insurance issues found in reviewing cooperative insurance programs and to make some general recommendations to boards on these important issues.

Cooperative Policy Contracts, Not Commodities

Insurance is one of the few industries where the product (i.e. the policy) is almost always purchased sight unseen with the actual policy contracts coming weeks or even months after buying them. This practice is a travesty that has hurt more businesses than can be imagined. Adding to the problem, many business attorneys, including those who specialize in cooperative law, may not have a good handle on insurance coverages and options and may, in fact, shy away from advising you in this area. Yet, when you think about it, one of the most important risk management measures a business can take is to transfer the risk of loss to an insurer so understanding the coverages is critical.

Think about this. How often would an executive enter into a lease agreement without checking with their legal counsel? What about a construction agreement or a purchase agreement? How about a land contract or equipment rental agreement? Most businesses engage their attorneys before signing such contracts. Insurance policies should be treated much the same way, but this is usually not the case.

The insurance buying process is one of the most serious tasks that a board can undertake.

As a board member, you should:

– Read your current cooperative business insurance policies. Get copies for yourself. You always want to be able to say as a board member that you made an attempt at reading these important policy contracts. However, even where policyholders do read their policies, they usually do not understand what they are reading or the options available to address the gaps so recognize that there are technical aspects of the policies that you most likely DO NOT understand. Check with your agent for further direction.

– Recommend the formation of an insurance buying subcommittee that can spend quality time understanding the cooperative’s policies and what is not covered.

– Avoid supporting a process of regular “bidding” of the cooperative’s insurance. Bidding implies that a commodity is being purchased and looks to which vendor has the lowest price. The lowest insurance premiums do not necessarily mean that the coverages are what are needed to properly protect the cooperative.

– Perform due diligence. Interview and hire insurance agents before agreeing to buy insurance from them. Evaluate their proposal based on the expertise and advice being offered. A cooperative is usually not served well by an agent who is a mere order-taker. Ask questions of insurance agents quoting on the insurance, including the following:

• How many cooperatives do you insure?
• Do you represent specific insurance companies that specialize in insuring cooperatives?
• What is the commission your agency would earn on this?
• What other related services do you include such as loss control and claims handling? • How does the cooperative’s current program differ from the one you are proposing? [Note: If the agent has not asked for a copy of the current policies, this is a major “red-flag.”]

– Ask for specimen copies of insurance policies being proposed.

– Consider recommending to the board that it hire an expert consultant or insurance attorney to review proposals and advise you of the price and coverages. Some of the things a good insurance coverage attorney or consultant does include:

• Analysis of cooperative’s insurance policies in relation to how they cover the exposures of the business and what critical gaps exist;
• Review of contracts as to how the exposures presented might or might not be covered by insurance policies;
• Drafting insurance requirements and waiver of subrogation provisions;
• Reviewing and comparing insurance coverage proposals offered by competing insurance agencies and advising the cooperative board on what it is buying; • Interviewing and making recommendations on insurance agencies;
• Working with the cooperative’s existing law firm on coverages.

Covered by D & O Policies:

While board members might think that any liability, he or she may have resulting from an insurance decision would be covered by the cooperative’s Directors & Officers (D & O) policy, this may not be the case. Many D & O policies contain an exclusion for decisions related to insurance coverages. If this is the case on your D & O policy, it would place an even greater emphasis on properly managing the insurance process and getting the right advice.

Other Suggestions

A checklist can be used to look for critical coverages.

1] Determine if the property insurance of the cooperative contains a dangerous coinsurance penalty provision that could make the cooperative a “co-insurer” of the loss with the insurer. Ask this question of your insurance agent. If the answer is “yes,” it may be time for a new agent.
2] One of the most common under-insured losses is in the area of having inadequate limits of insurance to replace a building following a fire or other covered cause of loss. How do you know if the selected limit is adequate? Especially in current times with building costs on the rise, this is a more important consideration than ever.
3] If you had to rebuild in a more expensive way to comply with current ordinances or laws, would you be properly covered? Look for what limit of insurance you have.

An Insurance Attorney’s Top Tips in Buying Insurance

  1. Before anything, assure that you have a competent and qualified insurance agent who is more than an “order-taker.” Sometimes, the insurance agent can be even more important than the insurer.
  2. Where necessary, consult with or retain outside experts to advise on the integrity of the business insurance program and to provide options to you. Insurance coverage counsel can be of assistance.
  3. All policies differ – some significantly – from each other. Don’t look at insurance as a commodity.
  4. Use checklists when evaluating competing proposals.
  5. Look carefully at D & O policies to see how the board is protected.