One of the all too frequent occurrences in common-wall homeowner associations occurs when a gap exists between insurance carried by the association and insurance carried by each homeowner. This is not a small problem. According to Murphy's Law: If there is a loophole, insurance adjusters will find it and refuse to pay a claim on it. Where the association maintains and insures the common area and building exteriors, owners are usually expected to maintain and insure the interior and all personal property. Different insurance carriers, however, define coverages differently, and a gap in coverage can result.

One way to eliminate the possibility of insurance gaps is to have both the association and all owners insured by the same carrier. It makes sense to go one step further and all use the same agent. When the same carrier is used, where one policy stops, the other begins. No gaps.

Another way of solving the problem is for the Board to adopt a "Maintenance and Insurance Areas of Responsibility List". This list identifies specific building components roof, plumbing, electrical, concrete and fences and assigns responsibility to either the association or the owner. This list should be consistent with maintenance responsibilities found in the governing documents.

Once the List is complete and approved by the Board, a copy should be provided to each owner with instructions that a copy be sent to their insurance carrier. Insurance agents are then effectively put on notice. The insured should also request that the agent identify any exceptions to the coverage to make sure there are no gaps. If there are gaps, this is the time to close them.

Insurance claim disputes are among the most frequent found in homeowner associations. Many of them could be avoided by closing the gap between coverages and clarifying the maintenance and insurance expectations of the parties. If your community has not gone through this exercise, now is a good time to get started. And don't delay. There's too much at stake. And don't forget to put it on your annual planning calendar to remind new owners.

For more on this subject, see www.regenesis.net

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Published: May 26, 1999

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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 .