We have a client that is a condo association. The condo association, by contract with all of the condo unit owners, is responsible for the building, and the condo unit owners are responsible for their individual units.

A bank for one of the condo unit owners wants to be listed as loss payee on the condo association's policy. Along with that, they are requesting that the declaration pages show the unit owners name, specific unit purchased, loan number, mortgagee clause, and the value of the unit she is purchasing.

We are of the opinion that they do not have an insurable interest in the building itself or the common areas.  The unit owner of each condo unit is responsible for his own unit that is contained inside the walls of the condo.  If a claim occurs, and damage is to the building and the units or just the units, the insurance would apply as follows:  the condo association's insurance company would take care of the building and the common areas, and the unit owners' insurance would take care of each individual unit.