Condominium associations play a crucial role in maintaining and insuring shared properties, ensuring the safety and security of both the buildings and their residents. John Carroll, a commercial underwriter at Central Insurance, emphasizes the importance of having the right insurance policies in place to protect against various risks.
In a condo setup, owners typically only own the inside of their units, leaving the association responsible for the exterior and common areas. This setup makes it essential for condo associations to have comprehensive insurance coverage. The first step in securing this coverage is to create a condominium association agreement, which outlines the responsibilities regarding property risks for both unit owners and the association.
Carroll advises that condo boards should familiarize themselves with state laws governing condo associations to understand their obligations. This knowledge helps in selecting appropriate insurance policies that align with the association’s needs.
A key component of condominium insurance is the master property policy. This policy covers the financial responsibilities of the association, particularly concerning the building’s exterior and shared amenities. There are three main types of coverage that associations can choose from:
- Bare Walls-In: Covers the structure up to the bare walls of each unit, with unit owners responsible for everything inside.
- Single Entity: Insures the building and units back to their original construction, leaving owners to cover any improvements made.
- All-In: Provides the most extensive coverage, including any additions or alterations made by owners.
The type of master policy selected by the association dictates what individual unit owners need to insure.
In addition to property coverage, condo associations must also consider general liability insurance. This protects against claims arising from injuries or damages in common areas, such as pools or gyms. If a resident or guest is injured in these spaces, liability insurance helps cover the costs.
Another important aspect is Directors and Officers (D&O) insurance. This coverage protects board members from lawsuits related to their management decisions. Given the large number of condo units in the country, this insurance is vital for those serving on boards to mitigate personal liability.
For associations with employees, workers’ compensation insurance is required. This policy covers medical expenses and lost wages for employees injured while working. Some states also require coverage for volunteer-related injuries.
To minimize risks, condo associations should engage in proactive risk management. This includes regular property maintenance, hiring insured vendors, and establishing safety guidelines for shared amenities. Regular insurance reviews with a knowledgeable agent can help ensure adequate coverage.
Carroll warns that insufficient insurance can lead to significant financial burdens on condo owners. If a claim exceeds the coverage amount, the remaining costs may be passed on to owners through special assessments.
Central Insurance prides itself on its experience in insuring condo associations. The company focuses on providing consistent coverage and support over time, helping associations find the right insurance solutions tailored to their specific needs.
For condo associations looking to secure their properties and protect their members, understanding and obtaining the right insurance is essential. Reaching out to an experienced insurance provider can make all the difference in ensuring comprehensive coverage and peace of mind.