Condominiums are a difficult subject in insurance because of the intersection of the unit owner's policy and the association's policy. Where exactly do the two policies meet?
Who is responsible for what part of the building is a common and confusing issue. A year or two ago, we presented a wildly popular web seminar explaining just how the coverage worked. Recently, fellow FC&S expert Diana Reitz blogged about improvements and betterments, so now seems to be a good time to talk about condominiums.
When dealing with condominiums, one of the first things to determine the unit owner's or the association's responsibility for parts of the property. Obviously, the unit owner's sofa is his responsibility and the association is responsible for the roof, but the interior walls, plumbing, and other parts of the property are not so obvious.
This is where a lot of confusion reigns. However, each state has a set of statutes that dictates who is responsible for what part of the property. These statutes define common elements, unit boundaries, and insurance requirements. The statutes are extremely helpful when trying to sort out condominium coverage.
When a condominium is being built, the developer creates a declaration that provides organizational structure by which the condominium is organized. The declaration must adhere to the statute requirements, and the declaration then becomes a document of guidance for the association and the unit owner.
From here, the association's policy and unit owner's policy can be tailored to cover required portions of the unit and building. Using the developer's declaration page and statutes allows for the property to be properly covered with no gaps between policies.
While all of this makes it sound easy, we all know how complicated it really is, so here's a totally shameless plug: “The Condominium Insurance Coverage Guide” addresses all of these factors and how to work among them in answering coverage questions.
What have been your toughest condominium situations?
This blog post is meant to provide insights into insurance coverage issues in general, and does not necessarily account for the differences in law and practice in different venues. As such, the opinions expressed within should not be construed as legal advice for the unique circumstances of any particular claim or suit.
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