How Do You Gauge What Condo Association Insurance You Need?

 

Accidents and natural disasters happen. Business owners must be prepared with the proper insurance to cover their assets if one of these incidents does occur. Condominium associations must include property, liability, and other coverages in their insurance. Read on to understand more about acquiring this type of insurance. 

What Does it Cover?

It is condo association insurance that typically covers common areas in a condominium community, such as sidewalks, fences, and exterior features. It also covers common exterior walls, entryways, hallways, stairs, and elevators. Special condo amenities, such as workout rooms, community rooms, and pools are also covered. 

General Liability Protection

Liability protection in an association's condo insurance legal or medical costs if someone files a claim against the association. For example, if someone slips and falls on a sidewalk in the complex, they may choose to sue the association for negligence. Liability protection protects an association from this type of claim. 

Property Coverage

In some cases, the association insurance may cover individual walls, ceilings, and floors. Individual owners are then responsible for all of the property contents within the unit, including appliances, furniture, and personal items. Other policies may contain coverage for all of the things that were originally built in the condo unit. That means that things like the original tub and appliances are also covered by the association insurance, but that the unit owner is responsible for any upgrades in these items. Look for coverage that also includes sewer backups, as damage can be costly to repair. 

Other Coverages

Other coverage protects directors and officers on the association board from claims of wrongful acts while performing their duties. Ordinance coverage helps to minimize the cost of repairs and maintenance when city ordinances or laws change in such a way as to require associations to update their buildings. Replacement cost claim coverage will pay the actual cost to replace items, rather than the depreciated value of items. Some association insurances will also provide for loss of income and extra expenses. This can cover up to 12 months of lost income if the business cannot be operated because of a direct physical loss that was covered under the policy.

Employee dishonesty insurance coverage helps when an employee has been dishonest and causes a financial loss to the association. If an association employs a property management firm, they should also consider purchasing a fidelity bond in addition to condominium association insurance. 

Who Pays for the Coverage?

Condominium associations are responsible for paying for this coverage. However, the fee is usually passed on by the association to the individual condominium owners in their annual dues. This helps split the cost evenly among all owners in the complex. 

Is it Enough?

In addition to those association insurance coverages, a condominium association may also need to purchase a few additional coverages. If the association uses vehicles for maintenance or transportation, they may need to add commercial auto insurance. Data compromise and restoration insurance is always a helpful add-on to make sure that the association gets back on track after an information breach online. Finally, worker's compensation protects employees in a work-related accident or illness.

Condominium association insurance is very important for both the business owner and the individual unit owners. Protect your community and association with policies that cover all known risks.