Maryland changes insurance requirements for detached condo units
The state insurance regulator reported that the mandated homeowners insurance does not necessarily need to be acquired under a separate policy.
The Maryland Insurance Administration published a bulletin reviewing the changes to the state’s insurance requirements for condos. These changes include reducing the coverage that a condo association is required to maintain for residential-detached condos and requiring that the owners of those units have homeowners insurance on the entire unit.
Prior to the changes, a condo association was required to maintain comprehensive general liability insurance and property insurance on the common elements, and for all attached and detached condominium units, with the exception of improvements and betterments installed in units by unit owners.
Under the new changes, condo associations will still need to maintain insurance for the common elements and units for attached or multifamily dwelling units. For detached units, which are standalone units that are similar to single-family homes, they will only be required to carry insurance on the common elements. The responsibility to maintain insurance on the unit is transferred to the owner of the unit.
The state insurance regulator advises that, contrary to what some producers are saying, the mandated homeowners insurance does not necessarily need to be acquired under a separate policy issued directly to the unit owner. The statute does not prevent an asscoation from voluntarily providing coverage to the owner of a detached unit, if they elect to do so. If the council does purchase a policy that provides coverage, the unit owner is not required to purchase a separate policy.
Insurance producers should confirm whether an association will provide coverage for the detached units, or whether the owner of the unit will need to acquire a separate policy. Unit owners should also be made aware that if the cause of any damage to the condo originates from their unit, they will be responsible to the association for the amount of the deductible under their insurance policy, up to $10,000.
The associations must alert unit owners of this responsibility and of the amount of the deductible annually.
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