A recent insurance claim brought to light some inconsistencies in our Master Deed and Bylaws regarding our insurance coverage. In 2012, an apartment on the 4th floor experienced a burst water heater that damaged that apartment and the apartments below it. An adjuster for Landmark American Insurance Company (the Association’s insurance company) reviewed our documents and determined that, due to contradictory language in the Master Deed and Bylaws, the FSHA insurance policy was responsible for paying the claim even though the damage was inside the apartments. The adjuster recommended that we clarify and amend the Master Deed and Bylaws to correct this inconsistency.
Reconstruction appraisals are done periodically to make sure the Association is sufficiently covered in case of a catastrophe (hurricane, earthquake, etc.).The last reconstruction appraisal was done in 2006 for a total of $17.6M. After the recent claim and at the request of our insurance agent, we had a new reconstruction appraisal done in September, 2013. This recent appraisal is for $20.8M, an increase of approximately $3M. This appraisal is to reconstruct the building, but does not cover any updates and improvements made inside each apartment. Our insurance agent recommended that we clarify and amend the Master Deed and Bylaws to reflect this.
Purpose of Amendments
Based on advice from our insurance agent, the adjuster, and our lawyer, the Board is proposing approval of these amendments to the Master Deed and Bylaws to accomplish two objectives:
- to clarify the extent of the Association’s responsibility to insure the property; and,
- to enable the Association to make repairs to an Apartment in emergency situations or in situations where the Owner has failed or refuses to make repairs, and repairs are necessary to prevent further damage to the Common Elements or to another Apartment.
In essence, these amendments say that Apartment Owners are responsible for insuring “Bare Walls IN,” everything inside the finished ceilings and the finished perimeter walls as well as the finish on the walls and ceilings; and the FSHA is responsible for insuring the unfinished ceilings and the unfinished perimeter walls (bare walls) and everything outside those walls of the apartment (“Bare Walls OUT”). It also gives the Association authority to make repairs to an apartment in emergency situations that are covered by our insurance policy.
Board Recommendation
The Fort Sumter House Board of Directors unanimously recommends APPROVAL of these amendments. This requires 2/3rds of all Owners to vote for approval. Please review the enclosed amendments and the document “Subject: QUESTIONS & ANSWERS about Proposed Insurance Amendments,” and submit your ballot before December 31, 2013.
The Fort Sumter Board of Directors
Attachments:
–> Proposed Amendment 13 to Master Deed – ?attachment_id=908
–> Proposed Amendment to Bylaws – ?attachment_id=907