Read about four main commercial insurance coverages for condominium associations.

Learn why condominium associations need commercial insurance.

Commercial insurance for condominium associations is a real thing, not to be confused with personal condominium owner’s and renter’s insurance. The differentiation is in who owns what, and who is responsible for what. This blog is limited to commercial insurance for condominium associations.

There are four main commercial insurance coverages for condominium associations. A brief outline follows, including suggested practical applications. Be aware that actual policy terms, limits, and conditions always apply.

1. Property Insurance:

What does the condominium association own? The building itself and any appurtenant structures.  The cost to replace them in the event of a total loss should be valued. The regular services of a qualified, professional appraiser specializing in cost to replace (not market value) are recommended. Instead of insuring to replacement cost value, some insureds opt for an agreed value endorsement, which waives co-insurance charges. Your independent insurance agent at Richey-Barrett Insurance is available to discuss with you the difference between replacement cost value and agreed value.

Business Income Coverage is an optional property insurance coverage that must be separately purchased with a separate limit. Consider a condominium association that owns and rents out office space. This coverage would apply if damage due to an accidental fire resulted in loss of rental income to the condominium association.

Equipment Breakdown Coverage is an optional property insurance coverage that must be separately purchased with a separate limit and separate deductible. A sudden and accidental breakdown in the condominium building’s electrical system, boiler, or heating system can be an expensive and immediate need-to-fix. Adequate Equipment Breakdown Coverage is the best solution for remedying such a loss.

2. General Liability: 

This provides protection to the condominium association for liability claims arising out of accidents that occur in common areas. General Liability insurance covers a broad range of liability claims from routine slips and falls to major property and bodily injury damage. While major liability accidents are much less common than routine slips-and-falls, they do occur, and you only need one to suffer crippling financial consequences. An example of a major liability accident could be a crane toppling over while lifting a rooftop air conditioning unit and demolishing a car with passengers in it that is parked in the common area parking lot. The condominium association’s General Liability policy would defend and protect it from a resultant property and bodily injury liability claim.

3. Directors’ and Officers’ Liability (D&O):

This coverage protects the condominium association board and the association with respect to liability claims for “wrongful acts”, as defined by the policy. One of the practical benefits of a D&O policy is defense costs are typically included (subject to the policy deductible and limits). Possible “wrongful acts” could involve discrimination, failure to properly enforce the condominium association’s rules and regulations, or challenges to the board’s decisions.

4. Umbrella Liability and Excess D&O Liability:

Depending on the size and exposures of the condominium association, additional limits may be in order. If your condominium association is considering additional limits beyond what is available in the primary General Liability or D&O policy, your independent insurance agent at Richey-Barrett Insurance has access to quality insurance markets that provide higher limits.

Richey-Barrett Insurance is your Trusted Choice Independent Insurance Agent for commercial insurance. If you are a board member of a condominium association, call us to discuss commercial insurance for the condominium association.