Cost to manage insurance claims

Started by TimD3 • 5 replies • 1474 views

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TimD3 (Texas)
Posts: 4

Posted:

Our property management company included a clause in our contact where they will charge 10% of the total amount of each insurance claim to coordinate and oversee repairs from these claims in my high rise condo building. Experience says that a very high percentage of insurance claims in high rises are related to water problems (i.e. pipe breaks, leaks, etc).

Anyone else have something like this in their contract with their property management company? Btw, we have an onsite Building Manager who is an employee of the property management company.

KerryL1 (California)
Posts: 14,550

Posted:

We also area a high rise and have an onsite PM. And it's also true here that we have plumbing leaks of various kinds--from common area leaks to personal hose breaks in condos.

There is no clause in our MC contract that any or all owners pay 10% of anything for any kind of water leak damage. I assume it's built into their monthly fee.

RogerB (Colorado)
Posts: 5,067

Posted:

TimD, while many management companies want to charge a percentage for handling insurance claims we do not. We charge by the hour as an extra cost item. Insurance claims can be very large, such as with one townhome HOA we manage. Insurance paid about $500,000 for damages to roofs, siding, and paint from a hail storm. With a 10% management fee that would be $50,000. Our fee, charged by the hour, was less than $1,000.

You might want to reconsider approving a management agreement with a percentage fee for insurance claims since that usually would be very costly to the HOA.

TimB4 (Tennessee)
Posts: 21,062

Posted:

One thing to remember is that, prior to signing, contracts can be negotiated.

If you like the company but don't like a clause in the contract, negotiate to remove it or change it to something both sides can agree with.

GenoS (Florida)
Posts: 4,276

Posted:

Tim brings up a good point. I've done work for lawyers in the past and they all will tell you to remember that EVERYTHING is negotiable.

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By TimD3 a clause in our contact where they will charge 10% of the total amount of each insurance claim to coordinate and oversee repairs . . . Btw, we have an onsite Building Manager who is an employee of the property management company.

Tim D3 :

So the higher the total final claim, the more the management company can bill you . . . Now what could possibly go wrong with that ?

Seriously, having handled a number of these claims in highrise condos, gotta tell you that they can vacuum up massive amounts of not-surcharged time & vexation unless slope-shouldered or neglected. Some civil judges themselves are unable to fully understand the factuals & legals of condo loss scenarios; how many property managers are likely to have comparable skillsets to properly platform or respond to these ? Given the trade-offs, there may not be a most cost-effective / longterm best answer.

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