Loss control, also known as risk management or loss prevention, is a process used by insurance carriers to reduce the chance a loss will occur. Part of loss control includes property inspections. Most carriers order property inspections to be completed at regular intervals, for example, every year, every three years, etc. Carriers may also schedule inspections after a property damage claim has been completed and the property has been repaired. The hired inspector visits the property, sometimes with the property manager or a board member and asks questions about the association. Then the inspector completes an inspection survey report and sends the report to the carrier for review. The carrier decides if they will require any of the inspector’s findings to be rectified by the insured. If so, the insurance agent advises the property manager or board to complete the recommendations.
Most carriers require a response within 30-45 days after receipt of the loss control notification. Typically, the response must include estimated timelines for completion of the requirements. Some of the requirements might include the following:
- Trim overgrown trees away from the sides and roofs of buildings to avoid a fire hazard.
- Inspect and repair or replace stained or deteriorated roofs to avoid leaks and water damage.
- Repair or replace paved surfaces to protect against trip hazards which can result in liability claims from injuries.
Because of the industry-wide challenges in the current insurance market, most carriers have tightened their eligibility requirements. They have become more selective about the clients they accept because the current reinsurance supply does not meet the current demand. Now, more than ever, carriers do not want to insure associations that cannot complete their loss control requirements in a timely manner. These associations are considered high-risk and often fall outside the carriers’ requirements. If an association receives a non-renewal or cancellation notice because they didn’t comply with loss control recommendations, competitive rates in the current market may be hard to find and the association is likely to see a significant premium increase.
To avoid a non-renewal notice, associations must comply with loss control requirements as quickly and thoroughly as possible. Continued property maintenance is one of the best ways to avoid loss control requirements from a carrier, as well as make the community safer for everyone to enjoy.
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