With today’s ever-growing “shared ownership” housing communities, Associations must take every precaution to protect their buildings, as well as protect the Association themselves, from loss and liability. While it’s impossible to anticipate every potential disaster, insuring the Association with property and liability coverage is an important step of protection.
Property insurance covers the common areas of the buildings, such as hallways, walls, ceilings and floors, and outdoor common areas and equipment. Insuring the buildings is one of the most important types of insurance for an Association. Within an Association’s governing documents, typically there is a requirement to insure a portion, if not the entire building, for replacement costs. This is known as Building Property coverage. Our first piece of advice is to review your Association’s governing documents to determine what exactly needs to be covered under your Association’s master policy.
Types of coverage:
Bare walls. This coverage is the least extensive form of building property coverage available. It covers the Association’s common elements, and is only extended to cover the bare or unfinished walls, ceilings and floors of the unit within the Condominium.
Single Entity or Original Specifications. This type of insurance covers the Association’s common elements and is extended to cover the finishing or completed walls, ceilings, and floors, including fixtures and equipment within the units. The single entity form of building property insurance will not cover any structural improvements, betterments and additions made or acquired by the individual unit owners.
All-inclusive or All-in. This is the most comprehensive form of building property insurance available. It will cover all common elements and all structural items, fixtures and equipment within an Association unit, including the structural improvements, betterments, and additions made or acquired by the individual unit owner. It basically covers all property within the unit except the personal belongings brought into the units by the individual owner.
Examples of other insurance coverage that Associations should consider:
- Business Personal Property
- Building Ordinance
- Back up of Sewer and Drain
- Mechanical Breakdown
- Separate Structures
- Outdoor Property
General Liability coverage
Liability coverage protects your Association in the event of slips, trips, falls, or other injury that may occur on the premise. It is important that this coverage also extends over the Professional Management Company, if the Association has hired one.
Non-owned and Hired Auto coverage are also very important to include in the Association’s insurance, as it protects the Association in the event a Board member or other representation of the Association was involved in an accident and then sued. Without this coverage, the Association would be required to pay for all defense costs out of their own reserves.
Give ABI Insurance a call today to review your Association’s insurance policy. After all, prevention before an incident happens is easier to handle than after it happens.