Risk Management and Insurance for Community Associations, Exams of Nursing

Download Risk Management and Insurance for Community Associations and more Exams Nursing in PDF only on Docsity! CMCA Exam Study Guide (100 out of 100) Questions and Verified Solutions Aggregate a maximum amount an insurer will reimburse a policyholder for all covered losses during a set time period, usually one year. Risk Management Identifying, assessing, responding to risk by reducing, removing, and insuring threats Risk Inventory Contacts, resources, areas to inspect & keep record of Immediate exposers to risk Severe weather, deficiencies, negligence Speed of Response Authorization, information, money, equipment, personnel, schedule Types of Exposure Property, Net Income, Liability, Personnel Property Exposures physical damages to property Net Income exposures Unexpected increase in cost/money Personnel Exposures death, retirement, resignation Liability Exposures 3rd party claims against association. (worker injured and suing ex) Liability Insurance Coverages Bodily injury, property damage, personnel injury (said/did), advertising injury (written/published) D&O Insurance Wrongful acts by association/board, negligence, omission, monetary (devalued), non- monetary(freedom) Community Manager role in Risk Responsibility Identify, review, monitor risk, inform Board, oversee insurance. Special assessment to cover cost Funding to pay for losses: Borrowing Taking out a loan/credit to cover expense Decision Matrix: Risk Retention Low frequency, low severity Decision Matrix: Risk Transfer Low frequency, High severity Decision Matrix: Risk Control High frequency, low severity Decision Matrix: Combination High frequency, High severity Screening Bidders for Insurance Policies tailored to your needs, HOA experience, carrier ratings. RFP Components for Insurance Intro, contacts, instruction/timing for submission, bid specs, fact sheet HOA, Gov Docs, Loss runs. RFP primarily for large projects, bid specs, inform on association, work conditions, surveys/outline job, dates, warranty reqs BBB Better Business Bureau RFP Contract provisions -parties involved -scope of work -compensation, time period -warranty, indemnification, insurance -permits/license -default financial protection. Loss Run History of claims on insurance policy Insurance proposal: Binding carrier gives agent authority to commit to insuring once association accepts. Insurance proposal: Firm numbers wont change unless specifications change Insurance proposal: Conditional all must be declared first Insurance Premium Calculation: Property Value of building x Rate Insurance Premium Calculation: Commercial Gen Liability # of units x rate + features Insurance Premium Calculation: Workers Comp Payroll x rate (not fixed) Property Coverage fidelity, environmental, flood, vehicle Liability Coverage general, D&O, umbrella, (vehicle non-owned) Personnel Coverage Worker comp, employment liability EEOC (Equal Employment Opportunity Commission) Work discrimination race/color/religion FLSA (Fair Labor Standards Act) Minimum wage and pay FMLA (Family and Medical Leave Act) allows employees to take time off from work for family or medical reasons. The FMLA requires employers that have 50 or more employees to provide employees with up to 12 weeks of unpaid family or medical leave during any 12 month period. FICA (Federal Insurance Contributions Act) social security & matching OSHA Occupational Safety and Health Administration FDCPA (Fair Debt Collection Practices Act) Fair Debt Collection Practices Act Fair Housing Act (FHA) The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin SSCRA (The Soldiers and Sailors Civil Relief Act) Requires the delay of all civil court actions, such as bankruptcy and foreclosure's, until the service member returns from active duty U.S. Bankruptcy Code Regulates how individuals and businesses can file for bankruptcy Specific Statute applies to one or more types of association Role of CPA prepares year end reports, audit. General State Statutes Applies to all types of associations, including community associations (for example, regular corporate or not-for-profit corporate statutes). Uniform statutes standardize laws for associations Governing Documents define rights and obligations, binding relationship, rules and regulations Hierarchy of Governing Docs 1. Federal Laws and State Statutes 2. Recorded plat/plan 3. Declaration, CC&R's, master plan 4. Lease/occupancy agreement 5. Articles of Incorporation 6. Bylaws 7. Board Resolutions Higher documents always overrule lower Recorded Map/Plat who maintains property, title to property CC&R's covenants, conditions, and restrictions Proprietary/Standard Lease/Occupancy premises, term of lease, powers Articles of Incorporation 9. Revision 10. Record Drafting Resolutions (P.A.S.S) P. Purpose (clarify rule, add or specify) A. Authority (bod, statutes, declaration, bylaw) S. Scope & Intent (who & what effected, when/where) S. Specifications (what those effected are expected to do) Development of ARC Guidelines Indicate what changes allowed, to help avoid claims of arbitrary or selective treatment Due Process Procedure A formal rules-enforcement process designed to protect the rights of all parties involved. There are several benefits to using a due process procedure to enforce community association rules: 1) Alleged violations all handled the same way. 2) Courts recognize and value the procedure. 3) Majority of violations can be resolved. 4) Non-threatening environment furthers voluntary compliance. 5) Provides opportunity to explore alternative means of resolution. Hearing with BOD Courtesy letter Cease and Desist Hearing Notice Hearing Decision Appeal Alternative Dispute Resolution arbitration and mediation from a third party Arbitrary/Arbitration 1. Determined by chance, whim, or impulse, and not by necessity, reason, or principle. 2. Disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments Internal Resources for Rule Enforcement 1. suspension of voting rights 2. suspension of amenities 3. Fines (violation) 4. Eviction (for tenants only) 5. Self-help (association corrects violation) External Resources for Rule Enforcement 1. Heath Department (# of occupants, feces) 2. Zoning (setbacks, fence, boat/car removal) 3. PD (noise, conflict, traffic violation, crime) 4. FD (fire lanes, hazardous material) 5. Building/housing standard dep (plumbing, electrical code) 6. Animal shelter (strays, wild animal, pet restrictions) Amending a Motion modifying another motion by inserting words or paragraphs, striking out words/paragraph Executive Session when board holds discussion of sensitive nature, personnel issues, contract discussion, lawsuits, violations Proprietary lease A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment. ad hoc committee a committee created for a specific short-term purpose Discretionary Budget Item based on owner, board and committee desires. Historical trend budgeting This method begins with the assumption that existing line items are needed. The amount of funds allotted to each during the current year is adjusted for expected changes in the coming year. Reconciliation of Expenses and Revenue Certificate of Deposit (CD) A savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return. Commercial reporting method Combines operating and reserve activities in the same column, as opposed to fund reporting, which consists of preparing separate columns for operating, reserve and any special funds. compilation a presentation of financial statements by a CPA without the assurance that the information conforms to GAAP GAAP Generally Accepted Accounting Principles. Year end reports, balance sheet, reserve/expense, cash flow statement, notes to financials Rule Variance process 1. Impact violation has on community 2. business decision with community in mind 3. document the decision making for variance/exception ex. at home business Balance Enforcement satisfaction vs enforcement of the law having compliance is more desirable to law ruling Budget Requirements: Federal must conform to IRS, EPA, FAA Budget Requirements: State insurance, workers comp Budget Requirements: Local property tax, inspections, recycling fees Budget Requirements: Association property maintenance, mandatory services, revenue source Budget Creation: Gather data: files, budget items for future rate increases by utilities/vendors, wish list of Board Budget Creation: 90 Days Gather budgets, expenses/financials/bills, etc Budget Creation: 45 days Should be approved by BOD to start of fiscal year Budget Creation: 30 Days distribute budget packet/reserve summary, Budget Creation: Start of Year execute and manage budget Mandatory Line Item needs/requirements Discretionary Line Items likes/wants Expense Calculating: Zero-base expense set to 0, amounts allotted must be split/justified. Discretionary Expense Calculating: Historical Trending use previous & adjust for expectations of increases. Mandatory Expense Calculating: Combined Method combines both methods for discretionary and mandatory calculating revenue loss deducted expense from income Balance Sheet what is owed, owned, and network/assets Assets money and other valuables belonging to an individual or business Member Equity the difference between associations assets & liabilities can be deficit or surplus liabilities - assets = members equity Deficit the amount by which something, especially a sum of money, is too small. Investment: Safety protects investments (money) from loss Investment: Liquidity how fast you can turn your investment into cash Investment: Yield the return received on the investment Types of Maintenance Programs: Routine mowing, pond maintenance, etc. Types of Maintenance Programs: Preventative cracks in road, cleaning sewer lines Types of Maintenance Programs: Emergency roof leak, burst pipes. Unpredictable issues Types of Maintenance Programs: Requested sprinkler head broken, pothole Types of Maintenance Programs: Reserve fence or roof replacement (with reserve $) Sustainable Communities restore/renew their own energy Maintenance Responsibility safety, responsiveness, fiscal responsibility, customer service Legally binding contract needs - Insurance/all assignability, modification, waiver, gov docs, severability, obligation Indemnification contractor reimburses claims/legal fees of claims against association Restoration contract clause showing the contractor must return property to original condition Loss Exposures Property: building inside/out Liability: damage that brings on legal claim Income: cost to fix Personnel: employee loss/lawsuit Types of Managers portfolio, on-site, large-scale, high rise, mixed use, developing communities. Management Contract A book that provides common rules and procedures for deliberation and debate in order to place the whole membership on the same footing and speaking the same language Second a motion the approval of a motion by another member Table a motion Incomplete items on the agenda should be rescheduled, or tabled, for another meeting Timed agenda A more specific agenda that limits the amount of time focused on specific areas, so as to move the meeting along at a more thorough and prompt pace. Master association An organization of homeowners in a large condominium or planned unit development (PUD) which includes representatives from other, smaller homeowner organizations Public offering statement A disclosure statement prepared by a developer that contains all material facts about a property offered for sale and that must be provided to a prospective purchaser in accordance with applicable state or federal law. Resolution A resolution is a motion that follows a set format and is formally adopted by the board of directors. Statute A formal written enactment of a legislative authority that governs a country, state, city or county. Board liaison system Directors are assigned to certain committees to guide the committee on Board policy and procedures and to report back to the Board. Directors serving as a liaison must distinguish their role from the role of the committee chairperson. Management audit A management audit consists of a review of governing documents and existing policies and procedures, current condition of the property, owner/resident satisfaction, and fiscal operations. This review can be done by the board and manager together, or a thirdparty management consultant can be hired. Management ethics the application of moral standards to management behaviour Standing committee Committees which have a continued existence and are not related to the accomplishment of a specific, once-only task. Budget and nomination committees are examples of standing committees. Appeal A request for a review of a case by a higher authority—if permitted by the governing documents or statute Default hearing A hearing held when the alleged violator fails to appear. Due process procedure a formal process designed to protect the rights of all parties involved. Hearing Notice This is a written notice to an alleged violator that a hearing will be held to consider his or her alleged violation. Rule A specific statement of required behavior whose violation carries a penalty (sometimes called a sanction). Chart of accounts An organized list of titles, descriptions and assigned numbers of all accounts in an organization's general ledger. The assigned number helps you locate the account. The title describes the purpose of the account Treasury Bills short-term government securities issued at a discount from face value and returning the face amount at maturity Waiver of subrogation The insurer waives its right to require the association to transfer recovery rights to the insurer regarding unit owners. Facilities management The process of operating, maintaining, repairing, and replacing common property—that is, the common elements or areas. Payment bond The surety guarantees that the contractor's suppliers and any subcontractors will be paid if the contractor does not pay them. Performance bond This is a guarantee by a surety (a third party) to protect the community association if the contractor fails to perform or finish the work. Because there is a cost to the community association involved, a performance bond typically is used with certain large projects. Progress payment Partial payments based on some demonstrable progress in completing the work involved Severability provision This provision states that if a court finds that any clause of the contract is illegal or unenforceable, that clause shall be severed (separated) from the rest of the contract, so that the whole contract need not be invalidated Waiver of lien A document which gives up the right to make a claim against the community association for payments not received. Waiver provision This provision states that a waiver (permission) by one party of any breach of contract (failure to fulfill a provision) by the other party shall not act as a general waiver of future breaches. Warranty A warranty should state what is covered, for how long, and what the contractor will do if the work or product proves defective Employee handbook The employee handbook summarizes company behavior requirements, outlines benefits offered and also gives tools that can be used to enforce disciplinary action if needed. Employers design handbooks to answer employees' questions before employees ask them and to advise them on company policies that an employee might have never considered. Employment at will This is a statement to the effect that the community association retains the right to dismiss an employee without cause at any time Progressive discipline system A procedure whereby performance problems are brought to the employee's attention and the employee and employer take appropriate actions to correct them. Characteristics of Community Association Mandatory membership, mutually binding documents and lien-based assessments. Architectural Guideline A rule that applies to the appearance or exterior of a lot, home, or unit. Community associations frequently develop architectural guidelines that address fencing, decks and patios, landscaping, doors and windows, color of exterior surfaces, and location of improvements upon lots, for example. Resolution Format Purpose, Authority, Scope and Intent, and Specifications. cease and disist Specific description of the alleged violation, the action required to resolve the alleged violation, a specific time within which the alleged violation must be corrected, and the penalty (sanction) which may be imposed after a hearing if the alleged violation is not corrected within the stated time (specified by state statute, your governing documents or board resolution). Hearing a Fact finding session, an inquiry to the allegations and an investigation of them Eviction The legal process of removing a tenant from rental property All of the following are types of association meetings except: ad hoc meetings It is good practice for an association to include a disclaimer in its employee manual stating that: It is not an implied contract or promise of employment To get needed maintenance work performed, a manager must organize the maintenance work into basic categories and: Create controls for ensuring that the work will be completed All the following are criteria to be considered when recommending a contactor to the board except: understanding of what needs to be done All of the following are true with respect to cumulative voting except: it helps establish a quorum Who is entitled to vote when more than one person owns a unit or lot? Owners should vote in concert, with one owner designated to cast the vote More and more associations are employing which professional to attend annual or special meetings and to rule on all procedural questions? professional parliamentarians A cost and fees contract covers: actual labor and materials costs and a percentage of profit What is an aid commonly used for planning and budgeting the use of personnel? Job description What sets forth criteria for the annual meeting, including notice, quorum, voting, and proxy procedures? Bylaws