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I recently attended the National Manufactured Housing Congress in Las Vegas. The event was much larger than past years, with many new faces for the industry and a lot of first time attendees. The most common question I was asked: “can you compete with so and so?” In other words, can you get me a lower price for my insurance? This question is very understandable especially for small budget operations. No one wants to over pay, but everyone wants everything covered. My response is typically, “sure if you want coverage that way.” What am I trying to say? When you find the community in a predicament, do you really want the cheapest insurance?

I estimate that once a year someone in the industry has a liability claim, which no one is arguing who’s innocent or guilty. In this circumstance, the insurance company is either paying policy limits or will deny the claim. I get involved with these claims as either the agent or the outside insurance expert.

Examples of unfortunate, tragic claims:
  1. Community manager driving personal vehicle hits little girl riding a bicycle, while showing homes in a community.
  2. Two children drown in ditch during storm.
  3. Sewer backs up in community that runs into water pump system. Before notice can be given to residents, over 200 become sick.
  4. Community manager’s son borrows a pickup with plow and hits another vehicle killing two and injuring two.
  5. Resident moves into home before the occupancy permit was received. After turning on the gas to light the furnace, the home blows up because the gas dry line was not shut off.
Now, examples of claims that I was an expert consultant to help find coverage:
  1. Furnace malfunction on a recently sold used home killing three and leaving one in coma. The problem: Policy was not endorsed to cover this type of exposure.
  2. School bus hits vehicle in community injuring 15 total. The community signage was claimed to be improperly placed. The problem: Carrier interpreted the policy incorrectly.
  3. City water was contaminated and the community pipeline was cited as part of the problem. The problem: Policy was not endorsed to cover this type of exposure.
  4. Community manager falls while cutting grass, maiming both feet. The problem: Community owner did not believe he needed Workman’s Comp and the manager was not offered a policy.
Risk ManagementSpring safety review
Spring is the perfect time to discuss safety! Follow these important safety tips to help ensure your safety during an emergency:

Step 1. Create an evacuation and reunification plan on www.ready.gov. Note: this process may take up to an hour or more. Plan enough time to start and complete the process because it will not be saved on the computer.

Step 2. Have a designated location where you will leave a note at your house such as inside the door or outside on the swing set. This will let your family know where you are.

Step 3. Have a primary location where you will meet at as a family. Generally, somewhere in the neighborhood like a school, park or community center. If you leave that location, be sure to leave a note at a designated spot telling family members where you went. DO NOT go to a hospital, police, or fire station unless you are hurt.

Step 4. Identify a secondary location that is further away, but within walking distance such as a church, library or community landmark—anywhere that you may find strength in numbers.

Step 5. If you can’t reach your family by phone, make contact with your back-up contacts by cell phone or text. Include ICE (in case of emergency) information in all family members’ cell phones. Tell them where you are. Make sure you have some way to charge your cell phone.

Step 6. Identify an out-of-town evacuation site such as a relative or close friend.

Step 7. Take individual pictures of your family members and a family photo and put them in every emergency kit and carry them in your wallet/purse. Have photocopies of birth certificates, driver’s license and social security numbers in an adult evacuation kit.

Step 8. Go over the plan with family members and then practice your evacuation and reunification plan at least once a year.
Risk ManagementCriminal screening procedures under assault by HUD
By: Matthew I. Paletz, Esq.
HUD's New Position on Criminal Screening
On April 4, 2016, the Department of Housing and Urban Development (HUD) issued a memorandum that will drastically affect landlords' criminal screening policies. Although criminals are not a protected class under the law, HUD states that “African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population.”HUD's position is that criminal screening of prospective tenants will likely have a disproportionate, or disparate, impact on these racial groups, drug offenses notwithstanding. Disparate impact is when there is a policy or practice that is neutral on its face, but is still found to have a discriminatory effect against a protected class. It looks at not just the intent of a policy, but the consequences of it as well.

What Does This Mean for Landlords and Property Owners?
Criminal screening by landlords coming under attack by HUD is yet another overreach of fair housing. However, HUD may still allow landlords to screen based on the nature and severity of the crime and the time elapsed since the conviction. The landlord must show that the screening policy is necessary to achieve a substantial interest and this must be based on actual evidence, as generalizations regarding behavior of criminals alone will not suffice.

In light of HUD’s requirement to support any criminal screening policies with data, we urge property owners to talk to their insurance carriers and third party screening companies and request that they provide actual statistics. Specifically, evidence that would show that past criminal offenders have a greater propensity to engage in future conduct that may jeopardize the overall safety and welfare of other tenants and the property at-large. After all, it is in their best interest to engage in this process.

Sex Offenders
Although HUD does not specifically address sex offenders, it is our position that it is reasonable to enforce a prohibition since these offenders generally do not fall into a specific racial designation. This is especially true if a property falls within a location that an offender would be precluded from living at under existing state law, such as in close proximity to a school. However, since there is no formal statement from HUD regarding these offenders, they are not technically precluded from investigating a denial. Therefore, it is ultimately up to the landlord to determine how aggressive to be.

The Bottom Line
This is a standard risk assessment as to the value of disallowing convicted felons for a potentially safer resident base versus exposure to fair housing liability. If an accommodation is sought by a prospective resident, then it should not be dismissed out of hand. Also, as with any fair housing issue, be mindful that investigators of these claims will interpret these new guidelines as broad as possible to serve their agendas. Therefore, having an overall fair housing policy is key to significantly reduce your risk. If you would like to have a policy drafted or reviewed, please contact our office and we can discuss with you in more detail. Also, for all things landlord-tenant, follow us on twitter at https://twitter.com/paletzlaw.
Risk ManagementEmployment Practice Liability Insurance (EPLI) basics4
I want to thank Matthew Paletz, Esq. for writing a great article on the new HUD rules for criminal screening. The coverage for lawsuits brought against community owners can be found in SOME Employment Practice Liability Insurance (EPLI) plans. I say SOME because there is not a standard form for EPLI. Here are the basics:
  1. Standard EPLI–Most often found in a package policy by endorsements. Coverage for acts against employees only. No coverage in HUD rule.
  2. EPLI with basic third party–Most often found in a package policy by endorsements, however, may be found as a standalone policy. Coverage for employees and employment activities. Only covers people you consider hiring.
  3. EPLI with broaden third party–Usually a standalone policy. Coverage for community on claims brought from all people. Yes, now you have coverage for the HUD rule.
  4. EPLI with third party and Fair Labor Standard Act–In addition to number three will defend against items such as not paying overtime or wrongful termination of employees with written contract of employment.
In conclusion, numbers one and two are moderate coverage, whereas three and four offer best coverage. But, yes, they do cost more!
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21 E Long Lake Rd, Ste 100
Bloomfield Hills MI 48304-2354
Phone: 248.283.0250
Fax: 248.283.0251
Cell: 800.775.3571