What Does a Condo Association Insurance Policy Cover?
As a condo association board member, it’s essential to understand the scope of a condo association insurance policy, also known as a community association insurance policy. This insurance policy provides financial protection against unexpected events that may arise within the condominium complex.
What is Covered under a Condo Association Insurance Policy?
A comprehensive condo association insurance policy covers three main areas:
- Insurance for the Condominium Property: This coverage typically includes the building structure, common areas, and appurtenances, such as:
- Roofs and exterior walls
- Electrical, plumbing, and HVAC systems
- Pools, spas, and other recreational facilities
- Landscaping and exterior decorations
- Fences and retaining walls
- General Liability and Directors and Officers (D&O) Insurance: This coverage protects the condominium association from claims and lawsuits related to:
- Accidents or injuries caused by the association’s operations
- Property damage or loss
- Disciplinary actions or lawsuits related to the association’s directors and officers
- Loss Assessment Coverage: In the event of a large loss, such as a catastrophic event, this coverage helps to pay for additional costs that may not be fully covered by the above insurance policies.
Policy Limits and Deductibles
It’s crucial to understand the policy limits and deductibles to ensure you’re adequately protected. Condo association insurance policies usually have the following limits:
- Property Coverage Limits: Typically range from 1% to 10% of the total condo association’s value, whichever is greater.
- General Liability and D&O Insurance Limits: Often range from $1 million to $5 million.
Deductibles
- Property Coverage: Typically range from $2,500 to $100,000, depending on the policy and the cost of repairs.
- General Liability and D&O Insurance: Often set at $1,000 to $5,000.
What’s Typically Excluded from a Condo Association Insurance Policy
While a comprehensive condo association insurance policy provides extensive coverage, there are some common exclusions to be aware of:
- Routine Maintenance and Repairs: These costs are typically covered by the condo association’s reserve fund.
- Condo Unit Owners’ Property: Each condo unit owner is responsible for insuring their individual unit against damage or loss.
- Business Interruption and Loss of Use Coverage: This type of coverage is typically purchased separately or through a business insurance policy.
Additional Coverage Options
To further customize and enhance your condo association’s insurance coverage, consider adding:
- Earthquake and Flood Insurance: Many regions are prone to earthquake and flood risks, so it’s essential to check if these coverages are necessary.
- Extra Hazard Coverage: This add-on provides additional coverage for high-risk activities, such as concerts, festivals, or large gatherings.
- Cyber Liability Coverage: Protects against online attacks, data breaches, and other cyber-related issues.
Conclusion
As a condo association board member, it’s crucial to thoroughly review and understand the contents of your condo association’s insurance policy. By considering the coverage options, limits, and deductibles mentioned above, you can better protect your condominium complex against unexpected events and ensure long-term financial stability.
Here’s a summary of what’s covered under a comprehensive condo association insurance policy:
| Coverage | Description | Typical Limits | Typical Deductibles |
|---|---|---|---|
| Property | Building structure, common areas, and appurtenances | 1-10% of total association value | $2,500-$100,000 |
| General Liability and D&O | Claims and lawsuits related to operations, property damage, or disciplinary actions | $1-5 million | $1,000-$5,000 |
| Loss Assessment | Additional costs arising from large losses | NA | NA |
Remember, a well-crafted insurance policy is essential for securing the financial well-being and peace of mind for condo association members.