While a condominium association has its own special insurance coverages, equally important is the kind of insurance carried by the owners. Condominium Unit Owners Insurance is available to a condo owner who resides in an association that purchases blanket coverage on the structures. There are several key coverages:

• Building Property This covers the unit features that are an owner’s responsibility to maintain and insure including finishes (wallpaper, flooring), fixtures (lighting, cabinets), unit alterations and additions.

• Personal Property Covers items like clothing and furniture. Make sure to buy replacement cost insurance, not depreciated basis.

• Inflation This automatically increases the amount of coverage by an inflation index.

• Loss of Use This coverage pays certain expenses if a condo is damaged and uninhabitable.

• Additional Living Expense This covers the expenses in excess of what the insured would normally have spent for food, shelter and related items, for the shortest time required to repair or replace your unit or to relocate elsewhere for a certain period of time.

• Loss Assessment This will pay the insured’s share of a special assessment required if the association has an insured loss and the insurance does not cover it.
  

• Personal Liability This pays the insured’s legal liability for financial damages resulting from someone being injured in the unit. It also pays for legal defense against these claims or suits.

• Medical Payments to Others This pays necessary medical expenses for guests who are accidentally injured.

It’s critical that the owners’ insurance provide coverage for those things that are their responsibility. The association should have a clear guideline as shown by an Areas of Responsibility List which defines those responsibilities. Share this information with your association members and ask them to review it with their agents.

Some final considerations:

All condo insurance is not the same. It’s best for association and owners to have the same insurance carrier to avoid gaps in coverage. Keep in mind that condo owners insurance is a personal insurance policy so home businesses require additional riders or a separate policy. Also, if the condo is rented, landlord insurance is required. Cost for insurance can be reduced by taking a higher deductible (amount insured pays before the insurance company pays anything).   And when buying condo insurance, always provide your insurance agent with a copy of the governing documents and association insurance policy so the agent knows what your insurance responsibilities are.

For more information on this subject, see www.Regenesis.net.

Published: March 22, 2001

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .