Council of New York Cooperatives & Condominiums
Article Archive
Financial Issues

Published: Autumn 2002

Even before the tragic events of 9/11/01, insurance companies were proposing significant premium increases. Record low interest rates were eroding their resources, and premium hikes were already overdue. Then came the devastating attacks, which occasioned enormous unanticipated payouts by the insurance companies. The result is significant increases in renewal rates this year and challenges in obtaining adequate coverage in many areas. Prudent boards are projecting doubling of their insurance costs in 2003 – and more.

Every building needs a package of many insurance coverages. These include:

  1. Property Insurance protects the building in the event of fire, flood or other disasters. It is projected to cover at least 80% of the cost of replacing the building. Some policies now contain exclusions for mold or lead problems or for acts of terrorism.
  2. General Liability Insurance protects in case of falls, theft and similar risks. Liability insurance proposals are at significantly higher rates this year, and, coverage is often limited, causing buildings to purchase additional ‘umbrella’ policies to achieve the level of protection that they deem prudent.
  3. Pollution Insurance protects from environmental hazards such as oil leaks, chemical hazards and mold liability that are excluded from other policies.
  4. Special Boiler and Machinery Insurance protects in case of damage to or from the boiler, the elevator or other mechanical equipment.
  5. Crime Coverage protects from loss by employee, managing agent or director theft of the building’s funds.
  6. Director and Officer Liability Insurance protects board members, committee members, volunteers, superintendents and management in case of lawsuits arising out of the performance of their normal duties.

A good insurance broker will work with your cooperative or condominium to ensure adequate coverage, although this is certain to be a difficult task this year.

At CNYC’s 22nd annual Housing Conference on Sunday, November 17th at Hunter College, a sequence of seminars explored insurance issues throughout the day. In the morning Barbara Strauss provided an overview of a building’s insurance needs. At midday, David Berkey moderated a session on Directors & Officers Liability Insurance, and in the afternoon Robert Mackoul discussed Homeowners Insurance.

The Comparative Study of 2001 Operating Costs will be published shortly and a copy will then be sent to every CNYC member cooperative and condominium and to all professional subscribers.

This annual analysis provides a framework to help you determine if your own building is operating economically and efficiently, by studying the various costs of operating a building. Code numbers are used to identify the participants, while preserving their anonymity. When the Study is sent to members whose financial data is included, they are advised of their code numbers so that they can easily locate their own statistic.

The Comparative Study analyzes all data on a per-room basis, beginning with the current assessment and mortgage figures for participating buildings as well as what they collect from shareholders or unit owners as carrying charges (‘maintenance’). The Study goes on to list amounts spent per room on wages, fuel, utilities, repairs and maintenance, insurance, management, administrative costs, water & sewer fees, property tax, and debt service. When possible, elevator maintenance and legal and accounting costs are broken out and listed separately. The Study also presents summary statistics, calculating the averages and medians for each item, and the average portion of total operating budget devoted to each. This summary recaps the last ten years to help identify trends.

The Comparative Study of 2001 Operating Costs can be purchased from CNYC for $5. Send your check to:

250 West 57th Street
New York, NY 10019-2142.

Make sure to specify the address to which to send the Comparative Study.

Particularly in an economic downturn, the boards of cooperatives and condominiums should not forget, as they plan their budgets, that their buildings do not exist in a vacuum. This is an important time to support the organizations that enhance the community. Parks, museums, Little League, scouting, after school programs, homeless shelters and block associations are important to our city. Now more than ever, they need support.

Your cooperative or condominium can make its own contributions to worthy organizations and can suggest to residents that they, too, may wish to support local institutions and help ensure their continuing viability.

At CNYC’s 22nd annual Conference on November 17th at Hunter College, attorney Mitchell Dix and community leader Carson Philips led an afternoon workshop exploring diverse ways in which cooperatives and condominiums can become involved in the communities beyond their own buildings. This interactive workshop invited participants to share their concerns and questions.


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