Yacht Insurance – The Basics
The primary purpose of a yacht insurance policy is to provide coverage for physical damage and liability that is generally caused by an accident. The two main sections of a typical yacht insurance policy are the Physical Damage and Liability section.
The physical damage section covers accidental loss or damage to the boat and its machinery. This not only covers the hull and the engine(s), but also the sails and other equipment on board that are required to operate the boat.
Physical Damage coverage generally pays for repairs to your boat that is necessary as a result of damage caused by a wide range of perils. The best policies provide “all risk” coverage, which means that if the cause of loss is not specifically excluded, it is covered. Typical causes of loss that are covered include: weather-related perils such as wind, rain, hail, lightning and wave action; fire; loss or damage caused by theft or vandalism; and collisions with docks, submerged or floating objects or other boats.
The Liability section, also known as Protection & Indemnity, covers your legal obligations to third parties. Legal liability can arise from bodily injury or loss of life, or damage to someone else’s property, as a result of the ownership or operation of your boat. Liability coverage also helps pay for your legal defense if you are sued for a liability that may be covered under your boat insurance policy.
The Liability section of a comprehensive boat insurance policy provides many coverages that are important. Coverage for the removal or disposal of the wreck of your boat is important to have, especially if the wreck is deemed to be a hazard to navigation. Boat owners may also be responsible for any containment and clean-up expenses resulting from oil pollution or contamination caused by their vessel. It’s important that your boat or yacht insurance policy covers your liability for those clean-up expenses because vessel owners are liable under the Oil Pollution Act of 1990 up to the statutory limit (currently $854,400). Finally, boat owners who employ paid crew members should ensure that their policy covers their liability to the crew under the Jones Act and General Maritime Law.
The yacht owner has the responsibility to maintain their yacht, and so normal wear and tear is often excluded under a boat or yacht policy. The number and type of physical damage exclusions vary from company to company.
For complete policy details of a yacht insurance policy, please contact me anytime.
Jeffrey M. Spector l Marine Insurance Advisor
Brown & Brown Marine l A Division of Brown & Brown of Florida, Inc.
1201 W. Cypress Creek Road, Suite 130 Fort Lauderdale FL 33309
Direct: 954-331-1359 l Cell: 954-663-3233 l Fax: 954-776-4446
Should Associations Cash Check Payments Wrongfully Marked As Payment in Full?
By Andrew Rand, controller & Director of Association Accounting at CSI Management Services LLC
Before August 8, 2014, community associations were comfortable with §718.116(3), which provided “any payment received by an association must be applied first to any interest accrued by the association, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment.” However, when a Florida Court of Appeals ruled on the case of Saint Croix Lane Trust & N.L. Shapiro, Trustee v. Saint Croix at Pelican Marsh Condominium
Association, Inc., everything changed.
The association had filed a lien foreclosure against a unit. The unit had a first mortgage, so the association didn’t bid at the foreclosure sale. Once the Saint Croix Lane Trust took title, the association demanded it pay the full amount of assessments due. The trust attorney disputed the amount, but provided a check for $840.00, which was less than the demand. A letter with the check said payment was being made “in full and final satisfaction of all claims made against the trust.” The association indicated it would accept it as a partial payment. At trial, the court ruled in favor of the association. However, on appeal, instead of §718.116(3), the court relied on §673.3111, which dealt with accords and satisfactions. It found that because the accord and satisfaction language was in the letter, and that the association cashed the check, the full amount due was satisfied.
A Shock For Associations
Attorney Michael Chapnick of Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A. said the case struck fear in associations familiar with accepting partial payments. Now partial payments and accompanying correspondence had to be carefully examined to ensure there was no language indicating accord and satisfaction.
Fortunately, the effects of the Saint Croix case were short lived. Effective July 1, 2015, the Florida Legislature adopted amendments to §718.116(3) to clarify the existing law. It now reads, “ … the foregoing is applicable notwithstanding §673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment.”
Boards and Managers:
Are you financially preparing for your Association’s midlife (could be concrete restoration) crisis?
By Andrew Rand, Director of Association Accounting at CSI Management Services
Proper financial forecasting with the intent of funding infrastructure maintenance can be a tremendous benefit to the Association and its membership. Preplanning can help by lessening the amounts of the highly dreaded special assessments and related loan expense. Living in South Florida with our extremely nice weather is wonderful, but if you live on the water, like many of the unit owners who read Opulence, the salt in the air and water already started destroying your building components even as your building was being built.
OK, so maybe Associations don’t actually have a midlife crisis per se but, is your Association turning 40 soon? How about in the next 5 to 7 or even 10 years? If so, it may be time to start thinking about how the Association will fund the expenses related to requirements that will be necessary to comply with the inspection for a 40-year Recertification Inspection. If the building is more than 40 years old and located in Miami Dade or Broward counties, the county or city will require an inspection for the building to become certified that the structural integrity and electrical safety is up to date. After the 40-year initial certification, the Association will have to recertify every 10 years thereafter. The inspections must be done by or under the supervision of a qualified architect or engineer. The idea is to
develop a plan for your aging building, so that its 40-year-old midlife (could be concrete restoration) crisis can be smoothed out over the years by not creating a major financial burden, all at once, to the membership.
According to Charles Smith, Director of Operations for CSI Management Services, LLC, “Preplanning; what you are trying to do is set up a schedule of projects. What that means is that you are setting aside dollars to try to do a project or two every year. So that way, you don’t get a large assessment come the 40-year. Basically what you are trying to accomplish is to have a qualified engineer come on-site around 30 to 35 years of age of the building to evaluate, to preplan and find a funding source so that the residents aren’t hurt by a large scale special assessment when the 40-year recertification becomes due. The keywords here are concrete restoration. This is usually, about 85 percent of the time, the most expensive building component to repair. With that, the sooner the concrete restoration projects are initiated or implemented, the better. This is because the more waiting only adds to the cost of the repair.”
Read Your Financial Statement, or else!
By Andrew Rand, Director of Association Accounting at CSI Management Services
Reviewing your Association’s financial statement package each month will assist in the internal control monitoring process and aid in preventing and detecting fraud and errors. And it will help the Board plan appropriately to maintain the healthy two-to-three months of cushion to meet emergencies or non-budgeted unexpected expenses.
An industry standard Association financial statement package should include a balance sheet, budget comparison income statement, bank reconciliations, copies of bank statements, the unit owner balances subsidiary ledger, accounts payable subsidiary ledger and other relevant supporting schedules. It is not possible to read and begin to understand your financial statement package if they are not reconciled and provided on a regular basis. If your property manager or property management company isn’t providing timely financial statement packages, question it.
As a board member with a fiduciary responsibility, the President and/or Treasurer should be reviewing these monthly reconciliations with original bank statements. The Association’s banking institutions should supply duplicate original bank statements each month directly to the designated board member. This is to ensure that the bank statements have not been altered to hide fraud or error. It’s important to compare the bank balance per the original bank statements to that on the bank reconciliation to make sure they match.
The bank reconciliations may also have reconciling items that include deposits-in-transit and outstanding checks. Any deposit that remains on the reconciliation for more than a month should be researched and resolved because it may become stale dated after 180 days. Outstanding checks that sit on the balance sheet for more than a month should also be accounted for.
According to Steve Mason, Director of Manager Education for CSI Management Services, “It all starts with monitoring the monthly variances on the budget comparison income statement and the chain reaction that can result in a negative fund balance. Look at the effect your total year-to-date net income or loss has on the financials and plan on how it can be monitored to achieve desired results.”
FBI Miami Citizens Academy’s Newest Member: Mark Blackburn of CSI
On May 29th, 2014, CSI Management Services Chief Operating Officer and Associate Publisher of South Florida Opulence Mark Blackburn graduated from the prestigious FBI Citizens Academy program. The Federal Bureau of Investigation Miami Division provides this eight-week educational course for outstanding community leaders to learn about the mission, objectives and services of the FBI Agency. This interactive class works to establish unity between law enforcement and private citizens by educating civilians about the inner working, roles and responsibilities of the FBI Agency.
“It was a great privilege to be accepted into the 2014 class of the FBI Citizens Academy program,” said Blackburn. “As an industry leader and Miami resident, I joined the program in an effort to better my community — but I soon realized that the knowledge I would acquire could translate into my business, as well. My lessons in weapons, counterterrorism and corporate espionage prepared me to become an ambassador to the community. I am confident that the valuable perspectives I’ve attained will serve as a tool to help protect my community.” Over the course in Miami (which just earned the President’s Award for Excellence,) Blackburn attended hands-on training sessions taught by the Special Agentin Charge (SAC), Assistant Special Agents in Charge (ASAC), Supervisory Special Agents (SSA), and Field Special Agents (SA). Upon completion, Blackburn joined the FBI Citizens Academy Alumni Association. This non-profit organization is a community-based foundation committed to supporting community need initiatives, sponsoring programs to promote civic education and public safety, and providing resources and opportunities that enrich youth development.
“I appreciate the commitment Mark has shown to the understanding of the FBI and its mission,” said James B. Comey, Director of the Federal Bureau of Investigation. “We are thankful for his support and we look forward to working with him in the coming years to protect our communities and our country.”
Insurance Premium Financing a Great Solution for Condo and Homeowner Associations
By Greg Mangram, City National Bank
Condominium and homeowner associations are faced with a large challenge every year when they receive the renewal of the association’s master insurance policy. In most cases, this premium is tens of thousands of dollars, and many associations do not have that large of a reserve to cover paying the premium in full.
Unlike personal insurance policies (automobile, homeowners, etc.) where the premiums can be paid over monthly installments, most condo and homeowner association policy premiums must be paid in full due to the relationship between the insurance broker and carrier.
Luckily for associations, there is a solution — insurance premium financing. In this situation, an outside vendor, such as a bank, will finance the large premium over the course of the year allowing the association to pay the premium over equal installments within 11 months, improve its cash flow and maintain its liquidity levels.
This short-term loan is typically at a low interest rate, and most vendors do not charge any fees associated with the loan. In addition, these loans have high approval ratings and typically close quickly, usually within 10 days. While interest rates vary depending on market conditions, typical insurance premium financing rates are between 2 and 6 percent.
The purpose of insurance premium financing is to allow condominium and homeowner associations the ability to pay out its premium over the course of the year, while at the same time making sure the insurance carrier is paid in full as required by the policy. This is an attractive alternative to associations having to come up with large sums of money within a short period of time.
When researching a vendor for insurance premium financing, look for one with an in-depth understanding of the factors affecting condominium and homeowner associations. Keep in mind that these premiums, while financed, will still need to be paid off within the year.
Insurance premium financing is an attractive alternative to paying premiums in full, allowing condominium and homeowner associations the ability to space out their payments and predict their monthly costs more accurately.
City National Bank is one of the largest community banks serving associations and property management companies. With a portfolio of more than 500 community associations, our dedicated community association services team has the knowledge and experience to help you meet your financial needs.
Free up your cash flow with Insurance Premium Financing. Take control of your receivables and keep your rainy-day fund. An 11-month term and quick turnaround gives your community the flexibility it needs.
City National Bank is a leader in community association lending, with a streamlined approval process, local decision-making and a dedicated team to service your community’s financial needs.
All loans are subject to credit and loan requirements.
Equal Housing Lender / MEMBER FDIC
Gregory E. Mangram – Business Banker – (305) 577-7395
Meet the VP in Charge of Exceeding Your Expectations
Dan Brooke, Vice President of Residential Operations at CSI
Your home is your sanctuary. Condominium associations that hire CSI Management Services to manage their pristine properties expect white-glove-level service in a luxurious, stress-free atmosphere, where behind-the-scenes logistics are seamless and virtually invisible to the homeowner.
Meet Dan Brooke. Some call him Vice President of Exceeding Expectations. Officially, he’s the Vice President of Residential Operations at CSI. He leads the division at CSI that continuously stays ahead of the curve when it comes to cutting-edge processes and procedures, making quality control top priority. Providing ever-evolving staff training at every level at CSI, Brooke drills down on efficiencies to enhance fluid operations from the field to the back office. All of this contributes to greater customer service. And that is what CSI is all about.
“After all, we are welcomed into the home of our clients to care for their home and business. The goal is always to have association members enjoy their home, with the best of luxury service and without worry of the day-to-day business operations,” said Brooke. “We deliver not only the highest quality of service, but we do so with a team that is very passionate about their profession. It is great to see our team go into action in a new site and begin identifying issues and make immediate improvements. I highly value working for a luxury property management company that truly has the best interest of our client in mind.”
Dan is a licensed Stationary Operating Engineer with 25 years of hospital engineering and facilities management experience prior to joining the CSI team in 2003. He has held the positions of Chief Engineer, Operations Manager, and Property Manager in the telecommunications and other commercial facilities. A licensed Private Pilot, Dan enjoys the freedom of flying to relax in his spare time.
If you have an operations question regarding your association, email Mr. Brooke at firstname.lastname@example.org.
Does Your Association “Have” a Surplus to Roll Over?
Stay with me here, we’re getting technical!
By Andrew Rand, Director of Association Accounting at CSI Management Services
As boards of directors prepare the next year’s annual condominium association budget, it’s common to start planning months in advance, before the actual current year ends. For example, they may work on budget preparations in September for implementation in January. However, without prudent planning, significant unexpected expenses can still surface before year’s end – such as storm damage – that can wreak havoc on a new budget. And we all know what that could lead to: the dreaded emergency special assessment.
No one can predict with absolute certainty when Mother Nature, or other circumstances, may trigger surprise expenses. But there are plenty of useful strategies of which BODs should be aware. One of those matters involves “Surplus Rollovers.” Used properly, and with actual funds, a surplus rollover may help prevent a maintenance increase. But used imprudently, a surplus rollover applied with “phantom funds” can also lead to mayhem.
Allow me to explain. Your association accountant will advise that a minimum of two months of operating expenses, on average, should be in the operating account at all times. This is to ensure the association can absorb expenses related to an emergency or unforeseen event. An amount in excess of that threshold may be considered as a surplus rollover toward the next budget. For example, let’s say an association’s budgeted expenses are $50,000 a month. Then the amount that should be maintained in the operating account at all times is $100,000. If during budget planning time (say it’s in September), the association has $150,000 in the operating account, then there may be a potential $50,000 “surplus” that could be rolled over into the next year’s budget. However, if an unexpected expense before year’s end should wipe out the surplus, then the “surplus rollover” applied in next year’s budget would disappear. The BOD would likely have to issue a special assessment to cover every-day operating costs. Additionally, even if a surplus rollover is successfully used in one budget year to offset an increase in maintenance fees, if the next year ends without a surplus, the BOD will need to find some way to replace those funds in the next budget, as well as funds to cover any new increases in operating expenses. And that could lead to the need for one doozy of a special assessment!
If your condominium association is considering applying a “surplus rollover” to next year’s budget, it’s best to consult your association’s accounting department first to understand the risks versus benefits of doing so.
Benefit For Families of FBI Fallen Heroes
2nd Annual G-Man Shoot Out Raises $50,000 to Benefit Families of FBI Fallen Heroes
Agents from the Federal Bureau of Investigation serve on the first line of defense when it comes to protecting the United States from acts of terrorism. When brave agents lose their lives in the line of duty, their families can face hardships. The FBI Miami Citizens’ Academy Alumni Association and the FBI Agents Association support families in Miami by hosting an annual G-Man Shoot Out and luncheon. This past October at Indian Creek Country Club, at the soldout 2nd annual golf tournament, 88 golfers and 225 awards luncheon attendees raised approximately $50,000 to benefit the FBI Fallen Agents Association. The proceeds provide college financial support to the children of agents killed in action, and the FBI Miami CAAA education programs.
The chairman of the event is Stephen H. Schott, a successful entrepreneur by day; a great humanitarian by night. Schott serves on the board of directors of the FBI Miami CAAA. “It’s tremendously rewarding with a significant sense of patriotism to help families whose loved ones in the FBI have fallen in the line of duty,” said Schott, who graduated from the FBI Miami Citizens Academy in 2010. “It’s important that we spread awareness in the community about the significant work the FBI does.”
Serving the community with honor
South Florida Opulence would like to tell you more about this humble man of integrity. Schott worked on Wall Street in New York City in the 1980s at Drexel Burnham Lambert. In 1988, he moved to Cincinnati and served as the chief operating officer of the World Champion Cincinnati Reds until 1991, overseeing all aspects of team management and representing ownership. He is a graduate of Denison University with additional studies in business and finance at Warnborough College in Oxford, England. Furthering his studies, he completed an executive program on Investment Decisions and Behavioral Finance at Harvard University’s John F. Kennedy School of Government. In addition, he serves on numerous local and national boards, including the Professional Football Hall of Fame, The Orange Bowl Committee and Schott Communities, a long-standing South Florida Program which serves individuals with physical and mental disabilities.
FBI Miami Citizens Academy
The Federal Bureau of Investigation recognizes the importance of forging strong alliances with local communities and community leaders. To accomplish this directive, the FBI developed and implemented the FBI Citizens Academy program. Delivered throughout the country, this intensive, interactive eight-week program was designed to educate civilians about the roles and responsibilities of the FBI agency, and how the communities play a key role in the agency’s successful operation. Students cover a curriculum that includes counter terrorism, white collar crimes, organized crime, cyber crimes, and civil rights, which are taught by Special Agents in Charge (SACs), Assistant Special Agents in Charge, and Senior Agents. Participants also partake in a live fire day at the firing range for instruction on firearms and safety. Upon graduation, students participate in a two-day field trip to Washington, DC where they tour FBI Headquarters, the FBI Academy at Quantico, and CSI Lab.
Among other requirements, potential Academy attendees must be a business, civil, religious community leader, nominated by a Bureau Employee or Citizens Academy graduate and approved by the Special Agent in Charge in Miami.
South Florida Opulence is pleased to announce that Mark Blackburn, Associate Publisher and Chief Operating Officer of CSI Management Services, has been accepted into the FBI Citizens Academy program.
“I got involved to be alongside other business leaders who have a passion for law enforcement,” said Blackburn, who was one of the 88 golfers during October’s G-Man Shoot Out. “It’s an honor to participate in such a worthy cause and to use my influence to help raise funds for the FBI Fallen Agents Association.”
For more information about the FBI Miami CAAA, go to www.fbicaaamiami.org.