Newsletter | March 2019 Print

March Chapter Meeting Highlights

Our March CAI Alabama Chapter Meeting was held at Avondale Brewing after work! We had a great turn-out, great discussions and good times! Big thanks to everyone who atttended, our outstanding speaker John Barnes with the Law Firm of Alford & Barnes LLC and our two meeting sponsors The Green Team and DMA Reserves!

If you would like a copy of John Barnes' presentation, please email Julia at [email protected]

Also, thank you to everyone who responded to our chapter meeting survey that was sent the day after this month's luncheon. The overall response was great and the information received will help us make our upcoming chapter meeting in May even better!




Visit or to view more photos from this luncheon.

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Making CAI work for YOU!

HAVE BREAKFAST WITH US! Our next chapter meeting will be a breakfast meeting on Thursday, May 23 at the Birmingham School of Law. The topic will be "Making CAI work for YOU".  David Jennings, VP of Education from the CAI National office will be our speaker and he will talk about all the educational opportunities that CAI offers for homeowner leaders, managers and business partners.

Breakfast will be catered by Ashley Mac.

Thank you to Landscape Workshop for being one of the chapter breakfast meeting sponsors. We are still looking for another meeting sponsor. If you are interested in sponsoring this event, please contact Julia at [email protected] or at 205-547-0733.

Click here to register for this chapter meeting!

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Homeowners! 2019 Board Leadership Development Workshop

Calling all homeowners! Whether you live in a condominium, homeowners association (HOA) or other type of community the Board Leadership Development Workshop  highlights what every board member needs to know to serve effectively.

This year's Board Leadership Development Workshop will be an all-day workshop held on Saturday, May 11 at Stillwaters in Dadeville, AL.

The following modules will be covered:

  • Module 1: Governing Documents and Roles & Responsibilities. To start you on the right path, Module 1 helps you understand the legal authority for your association. It also clarifies the duties and responsibilities of each board member and the professionals who are available to assist the board.

  • Module 2: Communications, Meetings and Volunteerism. Module 2 helps you learn how to maximize volunteer involvement in your community association by improving board communications, conducting effective meetings and building community spirit.

  • Module 3: Fundamentals of Financial Management. Module 3 introduces the fundamentals of association financial management, including guidelines for protecting your association’s assets, preparing a budget, planning for the future and collecting assessments.

  • Module 4: Professional Advisors and Service Providers. Because putting together the right team to support your association can be challenging, Module 4 provides practical tips on finding, evaluating and hiring qualified professional advisors and service providers.

  • Module 5: Association Rules and Conflict Resolution. Module 5 explores guidelines for making reasonable association rules, enforcing rules fairly and resolving conflict effectively.


Don't miss this great learning opportunity and register today! Also, please let anyone that might benefit from this workshop know about this upcoming course.

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Upcoming Webinar

Wednesday, Apr. 10, 2019, 1 - 2 p.m

Communicating with Difficult Homeowners: Strategies for Community Managers

Learn how to communicate effectively with homeowners and residents who challenge community rules, disagree with governing policies, or consistently question your management or governance decisions. You’ll get firsthand advice from an experienced community manager of a 30,000-resident community association where nipping negativity in the bud is essential to community harmony. Find out how to diffuse extreme situations while maintaining your sanity and get real-life examples for a closer look at successful communication strategies in action.

Click here to register for this live webinar.

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The Price of Insurance v. The Cost of Insurance: Pay an amount certain now, or be surprised later

Copyright © 2018 Joel W. Meskin

Community associations are creatures of budget. The primary purpose of a budget is to provide certainty and avoid surprises as the board complies with its obligation to protect, preserve and enhance the association assets. 

More often than not, board members primarily focus on “price” when purchasing insurance. However, “price” is only relevant if the options presented substantially provide the same coverage - apples for apples; or there are never any claims.

Caveat:  Remember not all insurance is created equal!

The reality is most boards never make the ultimate insurance decision, because they defer this task to the CAM.  Not only do they defer to the CAM for insurance decisions, they do not meet in person with the community association insurance professional. It is one thing to defer the insurance leg work to the CAM, however, it is another thing for the CAM to make the insurance purchase and maintenance decisions on their own. In my humble opinion, focusing primarily on the point of sale premium should be the last decision.  The key obligation is to determine whether the insurance proposal is proper coverage to protect, preserve and enhance the association assets. 


More often than not, the management agreement with the Association requires that the association unilaterally indemnify the Management Company and the CAM for claims arising out of services provided.

The board is obligated to protect, preserve and enhance the association assets. Primarily focusing on price in the insurance decision process is counterintuitive to this duty. Where in the governing documents does it provide that the board has a duty to save the association money when purchasing insurance? Nowhere! Rather, the duty is to determine what insurance will best protect the association assets.

Boards are authorized to seek counsel from professionals when an issue is beyond the knowledge of the average board member. Insurance is one of those issues. Moreover, why wouldn’t a board always seek counsel from a community association professional?  Boards are always looking for cheaper anything.  Why not obtain counsel from a community association insurance professional who does not charge.


The “cost of insurance” is not the same as the “point of sale premium.”  The “cost of Insurance” is the total amount the association incurs at the time of a loss or claim plus the value of peace of mind that the association receives during the claims process. If the board made sure they purchased the best coverage for the association, the cost of insurance will have been a good deal. However, if the focus was the point of sale price as opposed to coverage, there is a very possible reality that the cost of insurance could be significantly higher than the price, because the association will be self-insured for the coverage that was sacrificed for the cheaper price.

Caveat: More important for associations than “point of sale insurance premiums” is not being surprised by uncovered claims!



Many management agreements expressly provide that the CAMs assume the task of purchasing and maintaining the association’s insurance program. In other situations, many management companies take on this role voluntarily and may involve preferred insurance business partners in the process.

This practice in and of itself is not necessarily a problem. However, there are a number of traps for the unwary, including who is ultimately responsible for any errors in the purchase and maintenance of insurance. The key individuals that should be most concerned here are management company “owner” and Boards.

  1. Indemnification

Most management agreements have an indemnity provision that provides that if the CAM is sued for something it did for or on behalf of the association, the insured needs to provide the CAM defense and indemnity. Accordingly, the managed association must be able to fund that obligation. Many CAMs and Boards “assume” that this can be funded by the association’s Directors and Officers policy where the CAM is almost certain to be added as an additional insured, or are included in the policy definition of insured. As a result, the funding of the obligation owed the CAM is by the associations assets, special assessments or a loan.

It is also important that the Management Company or CAM understand the indemnity provisions of your state. Not all states will allow indemnification for someone’s active negligence, and many if they do allow indemnity for active negligence, that provision must be expressly set forth in the agreement, and in some states follow a certain formula.

  1. Community Association D&O Policy

Most Boards, Management Companies and CAMs “assume” that since the management company was working on behalf of the association, and since it is an additional insured on the D&O policy, that the CAM will be covered and that is how the insurance claim against the CAM, for whom the association agreed to provide defense and indemnity will be funded.

Unfortunately, virtually every D&O policy on the market “excludes” coverage for claims by the association against the Management Company or CAM. Even worse is that there are some D&O policies where the Management company or CAM is not even covered under a policy.


  1. Management Company/CAM Professional Liability Insurance

Virtually all CAM Professional Liability Insurance “expressly excludes” any claims arising out of insurance claims. This should make sense, because a professional liability policy is intended to cover the professional from its industry professional services. CAMs are not licensed Insurance professionals.


  1. Conflict of Interest

Some management companies or CAMs have their own preferred insurance professional who in turn has its own preferred insurance carrier. There are also some where the insurance is a division, affiliate or subsidiary of a management company. These may in fact provide the best products to protect the association’s assets. However, there are two key requirements. First, any such relationships must be expressly disclosed to the association board. Second, under this scenario, the management company or CAM must still conduct its due diligence as to the best available coverage, and not just the best price.


  1. Business Good Will

There are “Good Will” issues that can arise from insurance issues. First, very often the management agreement has a unilateral indemnity agreement flowing from the association to the Management Company or CAM. Theoretically, if the CAM does not purchase and maintain the appropriate coverage, it is still protected, because the association must defend and indemnity the management company or CAM. Who will tell the board that we the management company are being sued, but you have to defend us. As long as the management company is not concerned about losing the client, there is no problem. Does the management company and CAM have an obligation to disclose this to the association before the agreement is entered?


Second, what will the neighbor associations or other associations think when they hear about this?  What will the impact be on the association property values?


  1. Management Company CEOs Beware

One of the biggest mysteries I have encountered in my years in this industry is why there are Management Company CEOs, executives and owners who do not make it one of the highest priorities to make sure the association’s insurance program is the best.  Management Companies spend so much time making sure they are additional insureds on the association insurance policies, but they do not make sure the association’s policy is not the best.  The management company and the CAM’s coverage is only as good as the associations.



  • Community Association Insurance Professionals do not charge to meet, counsel or present to your Board. Make the Insurance Professional’s E&O on the line, not the Management Company or CAM.  The Insurance Professional, not the CAM is the licensed insurance expert.
  • Boards should exploit community association insurance professionals for two reasons. First, boards owe a fiduciary duty to the Association and relying on a licensed community association insurance professional.  By doing so, the board develops a strong defense to a strong business judgment defense.  Second, the counsel is free.
  • CAMS should never sign an application on behalf of an association. The association does not pay the Management Company or the CAM
  • Always make the board review the application, make any changes they need and have the appropriate board member sign the application.
  • Not all insurance coverage is equal.




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Spread the Word!

Spread the word about CAI to your friends and colleagues! Pick up several of our chapter business cards at our next meeting and let them know about the CAI Alabama Chapter and its great offerings for homeowner leaders and those that support HOAs and condominium associations!


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