Condominium Insurance Requirements: One Size Does Not Fit All

The world of condominium insurance can be complex and confusing. Whose insurance covers what? What kind of insurance does the association carry? Are unit owners required to carry their own insurance? To what extent?  And what about the deductible?

Fortunately, many of these answers can be found in the insurance article of a condominium association’s CC&Rs. But, not all CC&R provisions are equal, and what is and what is not covered in a property/casualty policy often depends on the specific language of the CC&Rs, the Condominium Act or the insurance policy. In most cases, the Association’s CC&Rs require it to carry one of three types of property/casualty insurance.

“Bare walls” coverage is the least extensive (and least expensive generally) form of condominium property insurance. This form of coverage insures the common elements and the bare or unfinished walls, ceilings and floors of units. Items such as cabinets, appliances and floor coverings are typically not covered by this form of insurance.

“Single entity” coverage is another prevalent form of condominium insurance coverage.  This form of coverage insures the common elements and most of the building, including structural items, fixtures and equipment in individual units. But, unit owners are typically responsible for insuring improvements or betterments to their unit.

“All inclusive” coverage is the most comprehensive form of condominium property insurance. This form of coverage insures the entire building - common elements, individual units and improvements and betterments to the unit. The only thing excluded from all inclusive insurance is the personal property of the unit owner.

On top of these types of coverage, associations also have to deal with issues of deductible amounts, full versus partial replacement costs, and other issues.  When evaluating its insurance coverage, a condominium association should know what type of insurance it is required to carry in the CC&Rs or by statute and what type of insurance it actually carries to avoid gaps in insurance coverage. One type of insurance does not fit every situation.

If you have any questions about condominium insurance or would like assistance determining the insurance requirements of your CC&Rs or the Condominium Act , contact Jason Miller or any other attorney at Carpenter, Hazlewood, Delgado & Bolen, PLC.