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Condo Association Insurance - What you need to know

One of the most important aspects of a condo association is the level of condominium insurance coverage that was selected by the association. A condo association insurance policy or "Master Policy" as it is usually called, will usually include coverage for initially installed property in accordance with the original plans and specifications of the building or buildings. Usually the building and all materials that make up the condo building are covered under this master policy.

Condo association insurance policies are usually written under an "all risk" coverage basis or a "broad form" basis. The all risk coverage will usually afford coverage of all perils. Some exclusions can apply such as earthquake, nuclear reaction or acts of war. The broad form coverage usually include losses resulting from fire, lightning, hail, wind, vandalism, sprinkler leakage, smoke and building collapse.

Types of Coverage

At the time of a claim, the amount payable to the insured association is usually based on the type of coverage selected. There are three types of coverage:
  • Actual Cash Value (ACV) - Pays the insured association for the value at the time of the loss. This usually includes depreciation and usage deductions.
  • Replacement Cost - Pays the insured association for the cost of replacement usually with a stated amount limit (for example: up to 125% of original value).
  • Guaranteed Replacement Cost - Pays the insured association usually with no maximum limit. Deductibles usually apply to a covered loss.

Condo association insurance also includes liability coverage for the covered premises. This liability coverage protects the association from a law suit brought against them as a result of an accident or injury that may occur on or in the condo property.

Directors and Officer's Coverage

The condo association's directors and officers are also exposed to law suits for their activities of managing and caring for the association's business. Directors and Officer's coverage, usually know as D&O Coverage should be included on all master condo policies. This type of coverage protects the personal finances and assets of the directors and officers in the event of a law suit against them.

Sometimes the association also acts as an employer for work such as maintaining grounds, performing minor repairs, snow removal, etc. Employment Practices Liability insurance should be then be obtained. This type of coverage will protect the association for a suit that could be brought against them as a result of the repairs or maintenance they performed. Employment practices liability insurance can usually be included under the D&O policy.

Free Condo Association Insurance Quotes

Coverage for a condo association should be reviewed at least once per year by the board members, their management company and a licensed insurance professional who specializes in this type of insurance. If you manage a condo and would like to get more information on how to properly protect the condo association with the right coverage, please submit your free, no-obligation condo association insurance quote request. Get expert advice and the best rates for your condo association.

Available to condo associations and property managers in Connecticut, New Jersey, New York & Pennsylvania

Click here for a free Condo Association Insurance Quote


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