Condo association insurance covers property and liability for the general association of homeowners, while individual condo owners maintain separate insurance. The policies vary according to the extent of ownership and obligations of the association, and must be purchased with the guidance of a specialized insurance agent.
Condo association insurance provides property and liability insurance for the general association of homeowners, while individual condo owners maintain separate insurance for their respective interests. Depending on the laws of the region in which the condo is located, the association’s ownership interest can range from common areas to the entire structure, with individual condo owners only owning airspace in their unit. Condominium association insurance policies vary according to the extent of ownership and obligations of the association.
This type of insurance can be divided into two main types of coverage: property and liability. Property coverage will insure all real and personal property owned by the association. In a condominium building, the deed or Conditions, Covenants and Restrictions (CC&R) will describe exactly what is owned by the association. The association is obligated to purchase and maintain insurance from the condominium association in an amount sufficient to replace the property in the event of damage. Insurance companies offer policies tailored to the association’s interests and work closely with the unit owner’s policy to avoid gaps or duplication of coverage.
The condominium association’s CC&R will also specify exactly what type of liability insurance and how much limits are required. At a minimum, condo association insurance will consist of general liability insurance to protect against claims made by third parties injured on the premises. Condo owners will have an individual unit owner policy to protect against their individual liability incurred in their unit. As with real estate policy, specialist policies must ensure that the condo association’s insurance does not conflict or override the unit owner’s policy.
Condominium association insurance must also contain directors and officers (D&O) liability coverage to protect the interests of those who serve on the association’s board of directors. D&O policies provide peace of mind to condo owners who volunteer to manage the association and may be personally exposed to complaints from other owners.
The specialized nature of condo association insurance means that it must be purchased with the guidance of an insurance agent who specializes in condo insurance. The agent must fully understand the association’s CC&R and insurance obligations to secure appropriate insurance policies. Certain insurance companies specialize in condo association insurance and provide a product that is simply modified to suit an association’s specific needs.
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